A Complete Guide to Reporting Foreign Assets and Income under CRS, FATCA and Indian Tax Laws

Introduction

In a globalized world, many taxpayers hold foreign assets or earn income outside India. To ensure transparency and prevent tax evasion, countries exchange financial information under CRS and FATCA. India receives detailed data about foreign bank accounts, investments, and income of its residents through these frameworks. It is mandatory for Indian residents to report their foreign assets and overseas income in their Income Tax Returns. This guide explains what to report, how to report, applicable schedules, legal obligations, penalties, and the revised return option.

Understanding CRS and FATCA

CRS is a global framework developed by the OECD where financial institutions share details of financial accounts held by foreign residents. FATCA is a US compliance system requiring foreign financial institutions to report accounts held by US taxpayers. India receives information under both systems, including account holder details, balances, income, controlling persons, and entity information. This data helps the Income Tax Department identify residents who may not have disclosed foreign assets or income.

Information India Receives from Foreign Countries

Under CRS and FATCA, India receives details such as name, address, tax identification number, nationality, date of birth, account number, closing balance, peak balance, interest, dividends, gross proceeds, and other foreign income. For entities, information may include country code, TIN or global entity number, type of entity, ownership details, and residency information. This allows the Income Tax Department to match foreign data with taxpayer disclosures.

Legal Requirement to Report Foreign Assets and Income

Residents of India must report all foreign assets and foreign income under the Income Tax Act, 1961. Schedule FA (Foreign Assets) must be filled for assets held outside India. Schedule FSI (Foreign Source Income) is used to report income earned from foreign sources. Schedule TR (Tax Relief) is used to claim relief for taxes paid abroad by submitting Form 67. Failure to report can attract penalties, assessments, and prosecution under the Black Money Act, 2015.

Benefits of Transparent Disclosure

Disclosure of foreign income and assets builds trust with tax authorities and reduces the risk of scrutiny. Proper reporting helps taxpayers avoid penalties and legal action. It also enables taxpayers to claim foreign tax relief and avoid double taxation. Transparent reporting supports national development by contributing to correct tax revenue collection.

Reporting Foreign Assets and Income in the ITR

Taxpayers who fill Schedule FA, Schedule FSI, and Schedule TR ensure full and accurate disclosure. This helps avoid penalties, assessments, and other consequences and allows claiming eligible tax relief under Indian tax law and DTAA.

Opportunity to File a Revised Return

If foreign assets or income were not reported in the original return, taxpayers can correct this by filing a revised return. For Assessment Year 2025-26, revised returns can be filed up to 31 December 2025. Taxpayers must choose the correct ITR form because ITR-1 and ITR-4 do not contain Schedule FA.

Selecting the Correct ITR Form

ITR-1 and ITR-4 cannot be used if the taxpayer has any foreign asset or foreign income. Taxpayers must choose an ITR form that supports Schedule FA, Schedule FSI, and Schedule TR. Using the wrong form results in incomplete disclosure.

Schedule FSI: Reporting Foreign Source Income

Residents must disclose foreign income earned or received abroad. Required information includes the country code, foreign TIN or passport number, nature of income, relevant DTAA article for tax relief, and details submitted in Form 67. Income must also be shown in the correct head of income in the computation.

Schedule TR: Claiming Foreign Tax Relief

Schedule TR summarizes tax relief claimed for taxes paid abroad. Taxpayers need to enter country code, foreign TIN, tax paid outside India, relief available under the DTAA or Indian law, and applicable section such as section 90, 90A, or 91.

Schedule FA: Reporting Foreign Assets

Residents must disclose all foreign assets held at any time during the relevant calendar year. Assets must be reported in the correct table from A1 to G. Foreign assets include bank accounts, investment accounts, foreign equities, debt instruments, insurance policies, annuity contracts, interest in foreign entities, immovable property abroad, and other capital assets outside India. Details required include ownership type, peak balance, closing balance, investment value, income earned, and income taxable in India.

Definitions for Schedule FA

Beneficial owner means the person who provided consideration for the asset and benefits from it.

Beneficiary means a person who receives benefit from an asset where consideration was provided by someone else.

Legal owner is the person in whose name the asset is held.

Schedule FA is not required for taxpayers who are non-residents or not ordinarily residents.

Overview of Foreign Asset Tables

A1 covers foreign depository accounts.

A2 covers custodian accounts.

A3 covers foreign equity and debt investments.

A4 covers foreign insurance or annuity contracts.

B covers financial interest in foreign entities.

C covers immovable property outside India.

D covers other capital assets outside India.

E covers foreign accounts with signing authority.

F covers foreign trusts.

G covers other foreign-source income not reported earlier.

Currency Conversion and Valuation Rules

Foreign values must be converted into Indian currency using the telegraphic transfer buying rate of the State Bank of India as on the relevant date. For Assessment Year 2025-26, the relevant year is from 1 January 2024 to 31 December 2024.

Important Clarification

Foreign assets disclosed in Schedule FA may also need to be reported in Schedule AL if applicable, to ensure complete compliance.

Conclusion

India receives extensive information on foreign assets and income through CRS and FATCA. Taxpayers must accurately report all foreign assets and foreign-sourced income in their Income Tax Returns to avoid severe penalties and legal consequences. Proper disclosure ensures transparency, allows legitimate tax relief, and keeps the taxpayer compliant with both domestic and global reporting frameworks.