Foreign Assets and Income Disclosure: Compliance Essentials for Indian Residents

Under the Income Tax Act and the Black Money and Imposition of Tax Act, of 2015, Indian residents must disclose their foreign assets and foreign income in their ITR for NRI (Income Tax Return). Schedule FA ensures that individuals declare foreign assets to prevent tax evasion and money laundering, enabling the government to track foreign holdings of Indian residents.

The Double Taxation Avoidance Agreement (DTAA) for NRIs provides consolation to taxpayers, confirming that income is not taxed twice in different countries.

Key Reporting Criteria:

• Foreign assets must be disclosed for any period during the calendar year.
• For Assessment Year 2023-24, disclose assets held between 1st January 2022 and 31st December 2022.
• Assets acquired between January 2023 to March 2023 are not required to be disclosed in the current filing.

Steps to Report Foreign Assets:

• Identify and select the relevant asset category from the ITR drop-down.
• Provide basic details of the asset (name, address, country, currency).
• Report the asset’s initial value, opening balance, highest balance, and closing balance in foreign currency and INR.
• Report income/revenue earned and proceeds from the sale/redemption of assets. Include details of the claimed DTAA relief (if applicable).

Penalties for Non-Disclosure or Misrepresentation:

• INR 10 lakhs penalty per year of non-disclosure.
• Imprisonment of up to 7 years for willful evasion of tax.
• Loss of DTAA relief rights.
• No penalty if the aggregate balance in foreign bank accounts is less than Rs 5 lakh.

Important Considerations:

• No Schedule FA is required for investments in Indian-origin schemes with a foreign mandate.
• India’s Exchange of Information (EOI) network shares financial data globally, and the Financial Intelligence Analysis Unit (FIAU) monitors such information.

For how to file income tax return for NRI, it’s important to follow the procedures carefully to avoid mistakes. The income tax in India for NRI is determined by residency status and applicable tax laws. If you're a non resident Indian, ensure you are compliant with nri tax in india rules. When filing your income tax return India for NRI, you may also wonder about the different types of nri taxation in india.

While NRI income is taxable in India, make sure you’re familiar with the nri tax return india procedures to avoid penalties or additional taxes. The tax for nri income in india can be complicated depending on various factors, so it's always best to consult with tax experts.

Also Read: When does one become an "NRI" as per indian laws?