As Per Income Tax Act, 1961, Residential individuals are required to disclose foreign assets in following cases:

• Holding any asset including financial interest in any asset located outside India as a beneficiary or otherwise
• Signing authority in any account located outside India.
• Beneficiary of any asset including financial interest in any entity located outside India.

What are the Foreign Assets to be reported?

The following are the foreign assets required to be reported in Schedule Foreign Assets

Information required for reporting Foreign Assets

The taxpayers are required to report the following information in Schedule Foreign Assets

A. For Foreign Depository Accounts, Foreign Custodial Accounts and Signing Authorities

• Name of the Country and Code of Country
• Name of the Financial Institution
• Address of Financial Institution
• Zip Code
• Account Number
• Date of Opening the Account
• Peak Balance during the period
• Closing Balance
• Gross amount paid or credited to the account (interest/dividend etc)
•  

B. Foreign Equity and Debt interest and Financial interest in any entity

• Name of the Country and Code of Country
• Name of the entity
• Nature of the entity
• Address of the entity and Zip Code
• Date of Acquiring the Interest
• Initial Value of the investment
• Peak balance of Investment during the period
• Closing value
• Total gross amount paid/credited with respect to the holding during the period (Dividends, Interest)
• Total gross proceeds from sale or redemption of investment during the period

C. Foreign Cash value insurance contract or annuity contract (Like Life Insurance and others)

• Name of the Country and Code of Country
• Name of Financial Institution in which insurance contract held
• Address of Financial institution and Zip Code
• Date of Contract
• Cash or Surrender Value of Contract
• Total gross amount paid/credited with respect to the holding during the period.

D. Immovable property (House, Buildings, Land etc)

• Name of the Country and Code of Country
• Address of the Property and Zip Code
• Date of Acquisition
• Total Investment (At Cost)
• Income derived from property
• Nature of Income (Rental income etc)
• Amount of taxable income offered in Income tax return

E. Any other capital asset (jewellery, Vehicles, Paintings etc)

• Name of the Country and Code of Country
• Zip Code
• Nature of the Asset
• Date of Acquisition
• Total Investment (At Cost)
• Income derived from Asset
• Nature of Income
• interest taxable offered in Income tax return

Value at which foreign assets needs to be reported (Conversion to INR)

The following rates needs to be used to convert the foreign assets into INR

• Peak Balance — The Telegraphic Transfer Buying rate (TTBR) needs to be used on the date of peak balance.
• Value of Investment — The Telegraphic Transfer Buying rate (TTBR) needs to be used on the date of investment.
• Closing Balance — The Telegraphic Transfer Buying rate (TTBR) needs to be used on the Closing date.

Period to Disclose Foreign Assets

The taxpayers are required to report the Foreign assets as on the end of calendar year i.e., between January 1 to December 31

How to File Schedule FA in ITR?

Here are the steps involved to file Schedule FA:

Step 1: Categorize Your Asset

The first step involves identifying the category under which your foreign asset falls. The ITR form provides a drop-down menu with various asset types. Choose the most relevant category that best describes your holding.

Step 2: Provide Basic Details

Once categorized, you’ll need to provide basic information about the asset. This typically includes Name, address, Zip, Country, and currency codes explained above

Step 3: Detail Investment Values

Here, you’ll provide details about the financial value of your asset. This might include:

• Initial Investment Value: The value at the time of acquisition (if applicable).
• Opening Balance: The asset’s value at the beginning of the relevant financial year.
• Peak Balance: The highest value the asset reached during the financial year.
• Closing Balance: The asset’s value at the end of the financial year.

It’s essential to report these values in the original foreign currency and its equivalent in Indian rupees (INR).

Step 4: Report Income and Proceeds

This step involves reporting any income or revenue from your foreign assets during the financial year. This could include:

• Income Earned: Interest, dividends, or any other income derived from the asset.
• Sale/Redemption Proceeds: Any proceeds from selling or redeeming the asset.

Step 5: Claim DTAA Relief (if applicable)

Double Taxation Avoidance Agreements (DTAAs) exist between India and many countries. You’ll need to report the details here if you have claimed any tax relief under a DTAA for income earned on your foreign assets

Sample of Schedule FA in ITR-2

What happens if one fails to report in ITR?

Failure to disclose a foreign asset, income in the ITR can attract a penalty of Rs 10 lakh under the Black Money and imposition of Tax Act