Who Must Report Foreign Assets and Income?

The Foreign Income and Assets must be mandatorily reported by the Indian Resident who qualifies as ‘Resident and Ordinarily Resident’ (ROR), as per the Income Tax Act, 1961. This includes:

• Resident Individuals and HUFs: Taxpayers who fall under the definition of ROR must report the details of their foreign bank accounts, signing authority, mutual funds or stocks, financial interest held overseas, and real estate.
• Beneficial Owners: Those who have a beneficial interest in a foreign financial asset or signing authority over an overseas account are required to disclose these details in their return.
• Beneficiaries: Those who are the beneficiaries of foreign assets and whose related income is not included in the beneficial owners’ return must submit their own return and report all the required information.

Where to Report Foreign Assets and Income?

If you are someone who possesses foreign assets, such as an immovable property, a foreign bank account, shares or other investments, or earns foreign income, you are mandated to disclose such income or assets in your Return. The details of your foreign income or assets must be disclosed very carefully in the correct schedules of the ITR.

Under the CBDT’s NUDGE 2.0 Campaign, taxpayers were being sent a reminder from the Income Tax Department to voluntarily report any foreign income or assets.

To report the foreign income or assets, the taxpayers must use either ITR-2 or ITR-3, based on their total sources of income. Only ITR-2 and ITR-3 have the mandatory Scheduled FA (Foreign Assets) and Schedule FSI (Foreign Source Income). Foreign income or assets cannot be reported in ITR-1 and ITR-4 as these forms do not have Schedule FA. So, if taxpayers are using ITR-1 or ITR-4, they will not see the relevant section to report the Foreign income or assets.

The Income Tax Department clearly mentioned that ITR-1 and ITR-4 do not include Schedule FA. The taxpayers must select the Correct ITR form and then select the revised return option and submit the details in schedule FA and other relevant schedules.

Due Date to File Revised Return for AY 2025-26

The last date to file a revised return for Assessment Year 2025-26 is December 31. This means that the taxpayers still have much time left to rectify any omissions and comply with the Income Tax Law. CBDT’s NUDGE 2.0 aims at enhancing the transparency for foreign assets and income under the international frameworks such as the Common Reporting Standard (CRS) and the Foreign Account Tax Compliance Act (FATCA).