Foreign Assets Schedule in Income tax return
Are you a resident tax filer as per Indian Income tax laws? Do you hold any foreign assets? If yes then this write is for you!
For residents in India with foreign bank accounts, assets, or income, filing the Income Tax Return (ITR) can be more complex than for others. The Foreign Asset Schedule is an essential part of the ITR , and non-disclosure can lead to severe penalties under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. This blog sheds light on the importance of complying with foreign asset disclosure and the consequences of non-compliance.
Who Needs to File the Foreign Asset Schedule?
As per Indian tax regulations, residents in India who possess foreign bank accounts, assets, or receive income from abroad as beneficial owner, beneficiary or legal owner must file the Foreign Asset Schedule along with their ITR. However, this requirement does not apply to individuals categorized as ‘not ordinarily resident’ or ‘non-resident.’
The Due Date and Its Significance
The due date for filing the Income Tax Return with the Foreign Asset Schedule for Assessment Year 2024-25 is 31st July, 2024. in case of non-audit case. This deadline is crucial, as missing it can result in penalties and legal consequences.
Importance of Full Disclosure
Residents with foreign assets and income must provide a comprehensive and accurate list of their foreign bank accounts, assets, and any income received from abroad. The tax authorities use this information to ensure tax compliance and prevent tax evasion. Also they always cross check information provided by you and information available with them.
Nature of foreign assets to report in ITR:
➢ Table A1 – Foreign depository accounts
➢ Table A2 – Foreign custodian accounts
➢ Table A3 – Foreign equity and debt interest [like stocks , ESOP, RSU]
➢ Table A4 – Foreign cash value insurance contract or annuity contract
➢ Table B – Financial interest in any entity outside India
➢ Table C – Details of Immovable Property held (including any beneficial interest) at any time during the calendar year ending on 31st December 2023
➢ Table D – Details of any other Capital Asset held (including any beneficial interest) at any time during the calendar year ending on 31st December 2023
➢ Table E – Any other account located outside India in which you are a signing authority. (which is not reported in tables A1 to D)
➢ Table F – Trust created outside India in which you are a trustee, a beneficiary or settlor
➢ Table G – Any other income derived from any foreign source. (which is not reported in tables A1 to F and income under the head business or profession)
Time period to look into for reporting this schedule:
For the purpose reporting Foreign Assets schedule the reporting period is now the calendar year ending on December 31st.
You must disclose all foreign assets held between January 1st and December 31st of the previous year, regardless of the foreign country’s fiscal year.
This simplifies reporting and eliminates confusion.
Penalties for Non-Disclosure of Foreign asset schedule
Failure to disclose foreign assets and income can lead to significant penalties. The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, imposes a penalty of Rs 10 Lakh for non-compliance. Avoiding this penalty is crucial for all taxpayers.
Finance Act 2024 have provided some relief, from above penalty [non/miss reporting], with effect from 1st October 2024, in case the aggregate value of such foreign asset or assets does not exceed twenty lakh rupees. [ Excluding immovable properties]
Seeking Professional Assistance
Foreign asset disclosure involved complexities. It is wise for taxpayers to seek professional assistance from tax experts or financial advisors. They can help navigate the nuances of the process and ensure accurate and timely submission of the Foreign Asset Schedule. Do not even try to fill info just watching y0u-tube videos.
Current Trend:
In today’s globalized world, employees of multinational corporations (MNCs) are increasingly receiving shares of foreign companies as part of their compensation packages. For Indian employees who are beneficiaries of Employee Stock Ownership Plans (ESOP) or receive Restricted Stock Units (RSUs), it becomes essential to report such foreign holdings in the Foreign Assets Schedule while filing their Income Tax Return (ITR).
Moreover, a growing number of individuals are investing in shares of foreign companies as part of their investment portfolio. It is crucial to determine the applicability of the Foreign Assets Schedule in such cases.
#ITR #Foreign Asset Schedule #ITRfiling
