Foreign Asset Reporting — Explained

This document covers

1. Background
2. Foreign Assets Reporting
3. Who are required to disclose Foreign Assets?
4. What are the Foreign Assets to be reported?
5. Information required for reporting Foreign Assets
   1. For Foreign Depository Accounts , Foreign Custodial Accounts and Signing Authorities
   2. Foreign Equity and Debt interest and Financial interest in any entity
   3. Foreign Cash value insurance contract or annuity contract
   4. Immovable property
   5. Any other capital asset
6. Value at which foreign assets needs to be reported
7. Period of Reporting
8. Consequences of Non-Disclosure of Foreign Assets or Mis-reporting of Foreign Assets
9. How to report Foreign Assets if you are filing through EZTax.in?

1. Background

Indian residents who are not required to file income tax returns must do so if they have any of the following during the fiscal year.

• 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.

NOTE: The persons are required to file income tax returns If they are holding any of the above even if their income is less than basic exemption limit.

Many foreign asset holders neglect this key declaration and compliance requirement when filling ITR in India.

2. Foreign Assets Reporting

• From FY 2011-12, income tax returns include Schedule Foreign Assets to prevent money laundering and tax evasion.
• Every taxpayer who is having any foreign asset needs to report the assets under the Schedule Foreign Assets
• Reporting Foreign Assets is mandatory disclosure while filing income tax returns

3. Who are required to disclose Foreign Assets?

The persons who are residents of India are required to disclose foreign assets in Income Tax Return.

When filing ITR, use ITR 2 and ITR 3 based on your tax profile to fill Schedule FA (FA stands for 'Foreign Assets'). If you are using EZTax.in to file Self Service ITR, refer How to report FA in ITR?

NOTE on NRI, RNOR Status: Non Residents and RNOR (Resident but not ordinarily residents) are not required to report their Foreign assets in Indian Income Tax Return.

4. What are the Foreign Assets to be reported?

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

• Foreign Depository Accounts (Like Bank Accounts, Term Deposits in foreign banks etc)
• Foreign Custodial Accounts
• Foreign Equity and Debt interest(Like Shares, Mutual Funds, RSU, ESOP, ESPP etc)
• Foreign Cash value insurance contract or annuity contract (Like Life Insurance and others)
• Financial interest in any entity (Companies, Partnerships, LLP’s outside India)
• Immovable property (House, Buildings, Land etc)
• Any other capital asset (jewellery, Vehicles, Paintings etc)
• Accounts of Signing Authorities
• Trusts created in the foreign country
• Other income from Foreign sources

5. 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

6. 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.

7. Period of Reporting

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

8. Consequences of Non-Disclosure of Foreign Assets or Mis-reporting of Foreign Assets

If the taxpayer fails to furnish the details of foreign assets or reported wrong foreign assets, it will attract a penalty of Rs 10 lakhs per year and even some times imprisonment of 7 years. Also, DTAA benefits will not be available for undisclosed foreign assets

9. How to report Foreign Assets if you are filing through EZTax.in?

If you are using EZTax.in to file your tax return, you just need to go to tax profile and select foreign assets. Now go to foreign assets screen and add the assets which you are having