Foreign Income and Assets in ITR: Schedule FA, FSI and DTAA Relief

Who must disclose foreign income and assets?

• Resident and Ordinarily Resident (ROR): taxed on global income and must fill Schedule FA, Schedule FSI (for foreign income) and Schedule TR (for tax relief).
• Resident but Not Ordinarily Resident (RNOR): taxed only on India-sourced income and income from a business controlled from India; Schedule FA is not required.
• Non-Resident (NR): taxed only on India-sourced income; Schedule FA is not required.
• Filing Schedule FA requires ITR-2 or ITR-3 — taxpayers with foreign assets cannot use ITR-1 or ITR-4.

What goes into Schedule FA (calendar-year reporting)

Schedule FA follows the calendar year, not the Indian financial year. For AY 2026-27 you report assets held at any time from 1 January 2025 to 31 December 2025, converted using the SBI telegraphic transfer buying rate as on 31 December 2025 (or the date specified for the relevant table). Common items include:

• Foreign bank accounts and custodial/depository accounts (including brokerage accounts such as those used for US stocks).
• Foreign equity and debt — listed shares, mutual funds and ETFs held abroad.
• Employer share plans — vested RSUs, ESPP shares and ESOPs of a foreign parent company, even when held through the employer's broker.
• Crypto and virtual digital assets held on foreign exchanges or in wallets with foreign custodians.
• Foreign immovable property, insurance or annuity contracts, retirement accounts (such as 401(k)), trusts in which you are a settlor, trustee or beneficiary, and any account in which you have signing authority.

Schedule FSI, Form 67 and DTAA relief

• Schedule FSI: reports foreign-source income (salary, dividend, interest, capital gains) country-wise for FY 2025-26, with the foreign tax paid on it.
• Schedule TR: summarises the tax relief claimed country-wise; it draws from Schedule FSI.
• Form 67 (Rule 128): mandatory to claim Foreign Tax Credit (FTC). File it online, with proof of foreign tax paid, on or before the end of the assessment year — 31 March 2027 for AY 2026-27 — and preferably before submitting the ITR.
• Section 90: relief where India has a DTAA with the other country (for example the India-USA DTAA). Credit is generally the lower of the foreign tax paid and the Indian tax on that income.
• Section 91: unilateral relief where there is no DTAA with the other country.
• A Tax Residency Certificate (TRC) from the other country is needed to claim treaty benefits.

Penalty for non-disclosure: Black Money Act

• Failure to report a foreign asset in Schedule FA can attract a penalty of Rs 10 lakh per assessment year under the Black Money (Undisclosed Foreign Income and Assets) Act, 2015, with possible prosecution in serious cases.
• Relief: the penalty does not apply where the aggregate value of foreign assets (other than immovable property) does not exceed Rs 20 lakh.
• India receives automatic information from over 100 countries under CRS and from the USA under FATCA, so unreported accounts are routinely flagged and notices issued.
• If you missed Schedule FA in an earlier year, a revised or updated return may help regularise the position.

Which ITR form should be used?

• ITR-2: residents with foreign assets/income plus salary, house property or capital gains, but no business income.
• ITR-3: where there is also business or professional income.
• See our NRI income tax guide if your residential status itself is in doubt, and the capital gains tax guide for sale of foreign shares.

Documents to keep ready

• Foreign bank/brokerage statements for January-December 2025 (peak and closing balances).
• RSU/ESPP vesting statements and broker holding reports from the employer plan.
• Foreign tax returns or withholding certificates (e.g. Form 1042-S/W-2 for the USA) as proof for Form 67.
• Tax Residency Certificate where DTAA benefits are claimed.
• Crypto exchange holding and transaction statements.
• SBI TT buying rate reference for 31 December 2025 conversions.

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All India ITR can review your foreign bank accounts, RSUs, overseas investments and crypto holdings, prepare Schedule FA, FSI and Form 67 correctly, and compute your DTAA relief before filing.

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Frequently asked questions

Who has to fill Schedule FA in the ITR for AY 2026-27?

Only taxpayers who are Resident and Ordinarily Resident (ROR) in India must fill Schedule FA. They report all foreign assets held at any time during calendar year 2025 (1 January to 31 December 2025), even if no income was earned from them. RNOR and Non-Resident taxpayers are not required to fill Schedule FA.

What is the penalty for not disclosing foreign assets in the ITR?

Under the Black Money (Undisclosed Foreign Income and Assets) Act, 2015, failure to disclose a foreign asset in Schedule FA can attract a penalty of Rs 10 lakh per year, apart from possible prosecution. Foreign assets (other than immovable property) with an aggregate value up to Rs 20 lakh are excluded from this penalty.

What is Form 67 and when should it be filed?

Form 67 is the statement required under Rule 128 to claim Foreign Tax Credit for taxes paid abroad. It must be filed online before the end of the relevant assessment year, so for FY 2025-26 (AY 2026-27) income, Form 67 should be filed on or before 31 March 2027, and ideally before filing the ITR.

Is foreign income reported for the financial year or the calendar year?

Foreign income itself is taxed on the Indian financial year basis (1 April 2025 to 31 March 2026) and reported in Schedule FSI. However, Schedule FA asset disclosure follows the calendar year, so in the AY 2026-27 return you report assets held between 1 January and 31 December 2025.

Sources reviewed

• Income Tax Department – Tax Transparency on Foreign Assets and Income
• Income Tax Department – Double Taxation Avoidance Agreements
• Income Tax Department – Non-Resident taxation (e-filing help)

This guide is for general understanding. Residential status, treaty relief and Black Money Act exposure depend on your specific facts — please take professional advice before filing if you hold foreign assets.