Reporting of Foreign Assets in the ITR Forms: What you should know

 

Lot many residents are investing in foreign assets / stock exchange. They should not forget to report the same in the ITR forms. Let us know aobut the reporting requirements as under:

 

 

1. Schedule FA requires reporting of assets held outside India. Such reporting is required if those assets are held at any time during the relevant accounting period.
2. The reporting is not mandatory by a taxpayer who is a non-resident (NR) or Not ordinarily Resident (NOR).
3. The Schedule: Schedule FA – Foreign Assets” is required to be filed for a taxpayer who is a resident in India.
4. More particularly, it is required to be filed by Resident with following criteria:
   (a) He holds any asset outside India;
   (b) He has signing authority in any account located outside India; or
   (c) He has income from any source outside India.
5. Reporting is required even if the asset is held for a single day during the relevant accounting period.
6. One may note the remarkable difference in the ITR Forms notified for Assessment Year 2022-23.
7. In ITR form AY 2022-23, the expression “accounting period” has been replaced with the calendar year ending as on 31^stDecember 2021”.
8. It means that the assessee shall furnish the details of all foreign assets held between 01-01-2021 and 31-12-2021 in return to be filed for the assessment year 2022-23.
9. Irrespective of the fiscal year followed in the foreign country (like, in America, calendar year is followed, Australia follows July to June, etc.), the reporting is to be made if the specified foreign assets are held on 31-12-2021.
10. As a result of this, the entire misunderstanding or miscalculation of the reporting period has been done away with.
11. Rule 128 of Income-tax Rules1962 elaborate the principles and conditions for computation and claim of foreign taxes paid in overseas countries by the resident taxpayers. If an assessee has paid tax in any foreign country or specified territory outside India then the taxpayers shall be allowed a credit for the same by way of deduction or otherwise. The credit shall be allowed in the year in which the assessee offered such income to tax or assessed to tax in India. A statement of foreign income offered to tax and the foreign tax deducted or paid on such income is required to be submitted in Form No. 67. The certificate or statement specifying the nature of income and foreign tax deducted or paid are required to be furnished on or before the due date for filing of ITR. This form No. 67 is required to be furnished electronically through the e-filing portal of the Income-tax department. Further, the details of tax relief claimed for taxes paid outside India are required to be reported in ‘Schedule TR’ of ITR form.
12. There are the occasion when the resident may be required dual reporting, first in Schedule AL which requires reporting of assets and liabilities if their total income exceeds Rs. 50 lakhs. Further, Schedule FA requires reporting of assets held outside India. Rpeorting in Schedule FA doesn’t give immunity from reporting in Schedule AL.
13. The Schedule FA requires the reporting if the taxpayers have beneficial owner or beneficiary. Explanation 4 to Section 139(1) of the Income-tax Act 1961 defines the meaning of ‘beneficial owner’. As per the Explanation, a beneficial owner means an individual who has provided, directly or indirectly, consideration for the asset. Further, if such asset is held for the immediate or future benefit of the individual providing the consideration or any other person.

14. Further, the ‘Financial Interest’ held by assessee in any entity outside India would mean the following:
    (a)The resident assessee is the owner of record or holder of legal title of any financial account, irrespective of whether he is beneficiary or not; or
    (b) The owner of record or holder of the title in one of the following:

i. An agent, nominee, attorney, or a person acting in some other capacity on behalf of the resident assessee with respect to the entity;

• A corporation in which the resident assessee owns, directly or indirectly, any share or voting power;

 

iii.   A partnership in which the resident assessee owns, directly or indirectly, an interest in partnership profits or an interest in partnership capital;

1. A trust of which the resident assessee has beneficial or ownership interest; or
2. Any other entity in which the resident assessee owns, directly or indirectly, any voting power or equity interest or assets or interest in profits.

Approved DIT Country codes (From Ass. Year 2013-14) Country code Country Name 1 CANADA 2 UNITED STATES OF AMERICA 5 ITALY 7 KAZAKHSTAN 8 RUSSIAN FEDERATION 14 PORTUGAL 20 EGYPT 28 SOUTH AFRICA 30 GREECE 31 NETHERLANDS 32 BELGIUM 33 FRANCE 35 SPAIN 36 HUNGARY 40 ROMANIA 41 SWITZERLAND 43 AUSTRIA 44 UNITED KINGDOM OF GREAT BRITAIN AND NORTHERN IRELAND 45 DENMARK 46 SWEDEN 47 NORWAY 48 POLAND 49 GERMANY 51 PERU 52 MEXICO 53 CUBA 54 ARGENTINA 55 BRAZIL 56 CHILE 57 COLOMBIA 58 VENEZUELA, BOLIVARIAN REPUBLIC OF… 60 MALAYSIA 61 AUSTRALIA 62 INDONESIA 63 PHILIPPINES 64 NEW ZEALAND 65 SINGAPORE 66 THAILAND 81 JAPAN 82 REPUBLIC OF KOREA (SOUTH KOREA) 84 VIETNAM 86 CHINA 90 TURKEY 91 INDIA 92 PAKISTAN 93 AFGHANISTAN 94 SRI LANKA 95 MYANMAR 98 IRAN 211 SOUTH SUDAN 212 MOROCCO 213 ALGERIA 216 TUNISIA 218 LIBYA 220 GAMBIA 221 SENEGAL 222 MAURITANIA 223 MALI 224 GUINEA 225 CÔTE D’IVOIRE (IVORY COAST) 226 BURKINA FASO 227 NIGER 228 TOGO 229 BENIN 230 MAURITIUS 231 LIBERIA 232 SIERRA LEONE 233 GHANA 234 NIGERIA 235 CHAD 236 CENTRAL AFRICAN REPUBLIC 237 CAMEROON 238 CAPE VERDE 239 SAO TOME AND PRINCIPE 240 EQUATORIAL GUINEA 241 GABON 242 CONGO, REPUBLIC OF THE… 243 DEMOCRATIC REPUBLIC OF THE CONGO 244 ANGOLA 245 GUINEA 248 SEYCHELLES 249 SUDAN 250 RWANDA 251 ETHIOPIA 252 SOMALIA 253 DJIBOUTI 254 KENYA 255 UNITED REPUBLIC OF TANZANIA 256 UGANDA 257 BURUNDI 258 MOZAMBIQUE 260 ZAMBIA 261 MADAGASCAR 263 ZIMBABWE 264 NAMIBIA 265 MALAWI 266 LESOTHO 267 BOTSWANA 268 SWAZILAND 270 COMOROS 291 ERITREA 352 LUXEMBOURG 353 IRELAND 354 ICELAND 355 ALBANIA 356 MALTA 357 CYPRUS 358 FINLAND 359 BULGARIA 370 LITHUANIA 371 LATVIA 372 ESTONIA 373 REPUBLIC OF MOLDOVA 374 ARMENIA 375 BELARUS 376 ANDORRA 377 MONACO 378 SAN MARINO 380 UKRAINE 381 SERBIA 382 MONTENEGRO 385 CROATIA 386 SLOVENIA 387 BOSNIA AND HERZEGOVINA 389 MACEDONIA 420 CZECH REPUBLIC 421 SLOVAKIA 423 LIECHTENSTEIN 501 BELIZE 502 GUATEMALA 503 EL SALVADOR 504 HONDURAS 505 NICARAGUA 506 COSTA RICA 507 PANAMA 509 HAITI 591 BOLIVIA 592 GUYANA 593 ECUADOR 595 PARAGUAY 597 SURINAME 598 URUGUAY 670 TIMOR 673 BRUNEI DARUSSALAM 674 NAURU 675 PAPUA NEW GUINEA 676 TONGA 677 SOLOMON ISLANDS 678 VANUATU 679 FIJI ISLANDS 680 PALAU 685 SAMOA 686 KIRIBATI 688 TUVALU 691 MICRONESIA, FEDERATED STATES OF… 692 MARSHALL ISLANDS 850 DEMOCRATIC PEOPLE’S REPUBLIC OF KOREA (NORTH KOREA) 855 CAMBODIA 856 LAO PEOPLE’S DEMOCRATIC REPUBLIC 880 BANGLADESH 960 MALDIVES 961 LEBANON 962 JORDAN 963 SYRIAN ARAB REPUBLIC 964 IRAQ 965 KUWAIT 966 SAUDI ARABIA 967 YEMEN 968 OMAN 971 UNITED ARAB EMIRATES 972 ISRAEL 973 BAHRAIN 974 QATAR 975 BHUTAN 976 MONGOLIA 977 NEPAL 992 TAJIKISTAN 993 TURKMENISTAN 994 AZERBAIJAN 995 GEORGIA 996 KYRGYZSTAN 998 UZBEKISTAN 1242 BAHAMAS 1246 BARBADOS 1268 ANTIGUA AND BARBUDA 1473 GRENADA 1758 SAINT LUCIA 1767 DOMINICA 1784 SAINT VINCENT AND THE GRENADINES 1809 DOMINICAN REPUBLIC 1868 TRINIDAD AND TOBAGO 1869 SAINT KITTS AND NEVIS 1876 JAMAICA 9999 OTHERS

List Upto Ass. Year 2012-13 CountryCode CountryName 93  AFGHANISTAN 1907 ALASKA 355 ALBANIA 213 ALGERIA 376 ANDORRA 244  ANGOLA 1264  ANGUILLA 1268 ANTIGUA 54 ARGENTINA 374 ARMENIA 297 ARUBA 247  ASCENSION 61 AUSTRALIA 43 AUSTRIA 994 AZERBAIJAN REPUBLIC 351  AZORES 1242  BAHAMAS 973 BAHARIN 880  BANGLADESH 1246 BARBADOS 375 BELARUS 32 BELGIUM 501  BELIZE 229 BENIN 975 BHUTAN 591 BOLIVIA 387 BOSNIA And HERZEGOVINA 267 BOTSWANA, REPUBLIC OF 55  BRAZIL 673 BRUNEI 359 BULGARIA 226 BURKINA FASSO 257 BURUNDI 1 CANADA 34 CANARY ISLAND 238 CAPE VERDE 1345 CAYMAN ISLAND 236 CENTRAL AFRICAN REPUBLIC 56 CHILE 86  CHINA 61 CHRISTMAS ISLAND 27 CISKEI 672 COCOSKEELING ISLAND 57  COLOMBIA 682 COOK ISLAND 506 COSTA RICA 385 CROATIA 53 CUBA 357 CYPRUS 420 CZECH REPUBLIC 246 DIEGO GARCIA 253 DJIBOUTI 1809 DOMANICCAN REPUBLIC 1767 DOMINICA ISLAND 670 EAST TIMOR 20  EGYPT 503 EL SALVADOR 240 EQUATORIAL GUINEA 291 ERITREA 372 ESTONIA 251 ETHIOPIA 500 FALKLAND ISLAND 298 FAROE ISLAND 679 FIJI REPUBLIC 358 FINLAND 689 FR POLYNESIA 33  FRANCE 594 FRENCH GUIANA 241 GABONESE REPUBLIC 220 GAMBIA 995 GEORGIA 350 GIBRALTOR 299  GREENLAND 590 GUADELOPE 502 GUATEMALA 245 GUINEA BISSAU 224 GUINEA REPUBLIC 592 GUYANA REPUBLIC 509 HAITI REPUBLIC 1808 HAWAII 36 HUNGARY 354 ICELAND 62  INDONESIA 98 IRAN 964 IRAQ 353 IRELAND 972 ISRAEL 39  ITALY 225 IVORY COAST (COTE D IVORIE) 1876 JAMAICA 81 JAPAN 962 JORDAN 855 KAMPUCHEA (CAMBODIA) 7 KAZAKISTAN 254 KENYA 996  KIRGHISTAN 686 KIRIBATI 965 KUWAIT 856 LAOS 371  LATVIA 961 LEBANON 266 LESOTHO 231 LIBERIA 218 LIBYA 423 LIECHTENSTEIN 370  LITHVANIA 389 MACEDONIA 351 MADEIRA ISLAND 265 MALAWI 60 MALAYSIA 960  MALDIVES 223 MALI 356 MALTA 976 MANGOLIA 1670 MARIANA ISLAND 692 MARSHALL ISLAND 596 MARTINIQUE 222 MAURITANIA 230  MAURITIUS 269 MAYOTTE 52  MEXICO 691 MICRONESIA 1664 MONTSERRAT 258 MOZAMBIQUE 264 NAMIBIA 977 NEPAL 31 NETHERLANDS 599 NETHERLANDS ANTHILLES 687 NEW CALEDONIA 64 NEW ZEALAND 505  NICARAGUA 227 NIGER 234 NIGERIA 683 NIUE ISLAND 672 NORFORK ISLAND 850 NORTH KOREA 92  PAKISTAN 680 PALAU 970  PALESTINE 507 PANAMA 675 PAPUA NEW GUINEA 595 PARAGUAY 51 PERU 63  PHILIPPINES 48 POLAND 351  PORTUGAL 1787 PUERTO RICO 974 QATAR 262 REUNION 230 RODRIGUES ISLAND 40  ROMANIA 7  RUSSIA 250 RWANDESE REPUBLIC 684 SAMOA AMERICAN 685 SAMOA WESTERN 378 SAN MARINO 966 SAUDI ARABIA 221  SENEGAL 248 SEYCHELLES 232  SIERRALEONE 65 SINGAPORE 421 SLOVAK REPUBLIC 386  SLOVENIA 677 SOLOMAN ISLAND 252 SOMALIA DEMOCRATIC REPUBLIC 27 SOUTH AFRICA 82 SOUTH KOREA 34 SPAIN 94 SRILANKA 290 ST. HELENA 1869 ST. KITTS/NAVIS ISLAND 1758 ST. LUCIA 508 ST. PIERRE & MIQUELIOM 239 ST. TOME & PRINCEP 1784 ST. VINCENT & THE GRENADIAN 249 SUDAN 597 SURINAM 268 SWAZILAND 41  SWITZERLAND 963 SYRIA 886  TAIWAN 255 TANZANIA 992 TAZAKISTAN 66 THAILAND 228 TOGOLESE REPUBLIC 690 TOKELAU ISLAND 27 TRANSKEI 1868 TRINIDAD & TOBAGO 216 TUNISIA 90 TURKEY 993 TURKMENISTAN 1649 TURKS & CAICOS ISLANDS 688 TUVALU 971  UAE 44  UK 380 UKRAINE 1  USA 998 UZBEKISTAN 678 VANAUTU 39 VATICAN CITY 27 VENDA 58  VENEZUELA 84 VIETNAM 1284 VIRGIN ISLAND (BRI) 1340 VIRGIN ISLAND (USA) 681 WALLIS And FUTUNA ISLAND 381 YUGOSLAVIA 243 ZAIRE 260 ZAMBIA 263 ZIMBABWE 1441 BERMUDA 27 BOPUPATSWANA 237 CAMEROON 235 CHAD 269 COMOROS 242 CONGO 45 DENMARK 593 ECUADOR 49 GERMANY 233 GHANA 30 GREECE 1473 GRENEDA 1671 GUAM 504 HONDURAS 852 HONGKONG 352 LUXUMBURG 853 MACAO 261 MADAGASCAR 373 MOLDOVA 377 MONACO 212 MOROCCO 95 MYANMAR 674 NAURU 47 NORWAY 968 OMAN 46 SWEDEN 676 TONGA 256 UGANDA 598 URUGUAY 967 YEMEN