Summary of this article
Indian residents must report global income and all foreign assets in ITR.
Schedule FA mandates disclosure of overseas bank accounts, property, and investments.
Non-disclosure under the Black Money Act risks fines and three to 10 years’ jail.
Even tax-paid or non-income generating assets abroad must be declared.
A person resident in India must disclose their worldwide income and all foreign assets in their Indian ITR, specifically in Schedule FA (Foreign Assets) and Schedule FSI (Foreign Source Income).
Foreign Assets and Income: What To Declare In Indian Tax Returns
“All types of foreign-sourced income, such as salary, dividends, and capital gains, must be reported, even if no taxable income is being generated or earned through those foreign assets. Additionally, taxpayers must disclose any financial interest in an overseas entity or even just having signing authority over a foreign account,” says Ritika Nayyar, partner, Singhania and Co.
Summary of this article
The legislative scheme governing disclosure of overseas assets and income by Indian residents is both wide-ranging and uncompromising. Every individual who qualifies as a “resident” under the Income-tax Act, 1961, is mandated to disclose in his return of income not only his domestic income but also his global income and the entire portfolio of assets held outside India.
“Such disclosure extends to foreign bank accounts, immovable property situated abroad, financial instruments such as shares, bonds, mutual funds, or insurance policies, directorships or beneficial interests in overseas entities, and even trusts where the assessee is a settlor, trustee or beneficiary.
Likewise, foreign income, be it salary earned overseas, rental proceeds from property abroad, dividends, capital gains, pensions, or interest, is taxable in India and must be comprehensively reported,” says Tushar Kumar, advocate, Supreme Court of India.
For this purpose, the Income Tax Return incorporates Schedule FA, which is a dedicated annexure requiring granular details of all foreign assets, their location, nature, ownership, and peak balances, thereby ensuring that no taxpayer can shield offshore wealth from regulatory scrutiny.
“Even if an asset abroad is tax-paid in another country or gives no income, you still need to report it in Schedule Foreign Assets in the income tax return if you are an ordinary resident Indian,” says Deepak Kumar Jain, Founder and CEO, TaxManager.in - the tax advisory and e-filing portal platform.
Small Foreign Asset Oversight Risks Large Fines And Imprisonment
The consequences of default are of the gravest nature, for the legislature has consciously adopted a deterrent framework under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.
“More seriously, wilful non-disclosure constitutes a prosecutable offence, inviting rigorous imprisonment for a term of three to ten years along with a fine, with the statute further prescribing that such offences are non-compoundable,” says Kumar.
The regime thus embodies not merely a fiscal measure but a moral command of legislative policy, that concealment of foreign wealth shall attract exemplary retribution, and only those who honour the duty of full disclosure may claim the protective shield of Indian tax law.
“Even a small oversight in declaring a foreign bank account, investment, or property can snowball into huge tax + penalties + possible jail. It’s far safer to over-disclose than risk under-reporting,” says Jain.
