Disclosure of foreign assets and income in the ITR:

 

1.Schedule FA:

In the Income Tax Return, there is a “Schedule-FA” which provides for disclosure of foreign assets and foreign income. This schedule requires details of foreign accounts held, foreign equity or debt interest, financial interests, signatory authorities in foreign bank accounts, capital assets, trusts, or any other income derived from sources outside India.

Corresponding disclosure in Schedule AL (Asset Liability, applicable where total income exceeds Rs. 50 Lacs) is also mandatory even if such assets are disclosed in Schedule FA.

2.Who is required to disclose foreign assets and income?

All Residents & Ordinarily Residents (R&OR) holding overseas assets as beneficial owners (Sec 139(1) of the Income Tax Act)

Thus, NRI and Residents who are not ordinarily resident (RNOR) are exempt from reporting.

3.Penalty for Non disclosure-

Under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, a penalty is provided for failure by a resident taxpayer to furnish or furnishing inaccurate particulars of foreign assets or foreign incomes in the return of income.

The penalty is Rs. 10 lakh per year, and the only exception is for a foreign bank account whose balance was less than equivalent of Rs. 5 lakhs during the year.

The CBDT, in a circular issued in 2015, had clarified that non-disclosure in Schedule FA (Foreign Assets Schedule) of the tax return, of a foreign asset acquired out of disclosed income, would also attract the penalty.