In an increasingly interconnected global economy, financial transparency has become a cornerstone of responsible governance and international cooperation. To strengthen this framework, the Income Tax Department has highlighted the significance of the Common Reporting Standard (CRS) and the Foreign Account Tax Compliance Act (FATCA)—two global mechanisms designed to curb tax evasion by enabling seamless exchange of financial information across jurisdictions. Through its ongoing e-campaign, the Department seeks to remind taxpayers of their statutory obligation to accurately disclose all foreign assets and income reported under these frameworks.
CRS, an initiative of the OECD, mandates financial institutions worldwide to report details of financial accounts held by foreign residents, enabling annual information exchange between participating nations. FATCA, implemented by the United States, similarly requires foreign financial entities to report holdings of U.S. taxpayers to the IRS.
Reflecting these international commitments, the Income Tax Act, 1961 requires Indian residents to declare their foreign assets and income in their Income Tax Returns, using Schedule FA for asset disclosures, Schedule FSI for foreign-sourced income, and Schedule TR for claiming tax relief on taxes paid overseas.
Failure to comply with these disclosure requirements can lead to severe consequences, including penalties and prosecution under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. By ensuring complete transparency in their tax filings, taxpayers not only safeguard themselves from legal risks but also contribute to national integrity and fiscal growth. To facilitate compliance, the Department has also provided a step-by-step guide for completing Schedules FSI, TR, and FA in the ITR.
Hope you will find this useful.
Warm regards,
Samir Mahajan
Enhancing Tax Transparency: Understanding CRS, FATCA and Reporting Foreign Assets in ITR
India’s e-Campaign to Promote Accurate Reporting
The Income Tax Department’s e-campaign reminds taxpayers that foreign assets and foreign income reported through CRS and FATCA should be properly disclosed in their ITR.This ensures consistency between international reports and individual tax returns.
Legal Requirements Under the Income Tax Act, 1961
Indian residents must report:
- Foreign assets
- Foreign income
- Tax paid abroad, if any
This disclosure is mandatory in specific schedules of the ITR form:
Schedule FA – Foreign Assets
Used for reporting all assets held outside India, such as:
- Bank accounts
- Shares, mutual funds, or other investments
- Immovable property
- Beneficial ownership in foreign entities
- Any other financial interest held abroad
Schedule FSI – Foreign Source Income
Used to declare income earned from outside India, including:
- Salary
- Interest
- Dividends
- Rent
- Business profits
- Capital gains
Schedule TR – Tax Relief
Taxpayers who have paid tax overseas on any foreign income can claim tax relief under:
- Section 90
- Section 90A
- Section 91
Schedule TR helps ensure that the same income is not taxed twice.
Consequences of Not Reporting Foreign Assets
The Department warns that failure to disclose foreign assets or income may lead to strict action under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, which includes:
- Heavy penalties
- Prosecution
- Tax demand with interest
Non-disclosure is treated as a serious offence due to international transparency commitments.
Why Accurate Reporting Matters
By following these rules and reporting all foreign assets and income honestly:
- Taxpayers avoid legal problems
- Build a compliant financial profile
- Contribute to financial discipline and national development
- Maintain transparency and peace of mind
The Income Tax Department emphasizes that accurate, complete reporting strengthens India’s commitment to international tax transparency.
Step-by-Step Guide to Filling Schedules FSI, TR and FA in the Income Tax Return (ITR)
Residents in India who earn income from foreign sources or hold assets outside India must complete three key ITR schedules: FSI, TR, and FA. This guide provides a concise overview of what each schedule requires and how to report the information correctly.
1. Schedule FSI – Foreign Source Income & Tax Relief Details
Schedule FSI applies only to Resident taxpayers. It captures each item of income accruing or arising outside India, along with foreign tax paid and eligible relief.
Key reporting requirements
- Report each foreign income item separately, and ensure the same income is also declared in the relevant head in the main ITR (Salary, PGBP, Capital Gains, Other Sources).
- Country Code: Use the country’s ISD code.
- TIN: Enter the foreign tax identification number. If not available, mention passport number.
- If foreign tax relief is claimed, specify the DTAA Article.
- Foreign tax credit (FTC) can be claimed only if details are also furnished in Form 67.
What to disclose
For each foreign income source:
- Country code and TIN
- Type/head of income
- Income amount and INR conversion using SBI TT buying rate
- Foreign tax paid
- Tax relief claimed under Section 90/90A/91, as applicable
- Corresponding ITR schedule where income is reported
2. Schedule TR – Summary of Foreign Tax Relief
Schedule TR provides a country-wise summary of foreign taxes paid and relief claimed, based on Schedule FSI.
How to fill
- Columns (a) & (b): Country code (ISD) and TIN/passport number
- Column (c): Total tax paid outside India (sum of FSI entries for that country)
- Column (d): Total tax relief available (sum of relief entries in FSI)
- Column (e): Mention whether relief is claimed under Section 90, 90A, or 91
Important
- Ensure totals in TR match the sums of corresponding entries in Schedule FSI.
- Relief is allowed only if Form 67 is filed before filing the ITR.
3. Schedule FA – Foreign Assets & Income
Schedule FA is a comprehensive disclosure of all foreign assets or accounts held at any time during the calendar year (1 Jan – 31 Dec) preceding the assessment year.Applicable only to Residents; NRIs and RNORs need not fill it.
Types of foreign assets to report
Schedule FA is structured into multiple tables:
- A1 – Foreign depository (bank) accounts
- A2 – Foreign custodian accounts
- A3 – Foreign equity/debt investments
- A4 – Foreign insurance or annuity contracts
- B – Financial interest in any foreign entity
- C – Immovable property located outside India
- D – Other foreign capital assets (not stock-in-trade)
- E – Foreign accounts where the taxpayer has signing authority
- F – Foreign trusts where the taxpayer is trustee/beneficiary/settlor
- G – Any other foreign income not reported above
Disclosure requirements
For each category, report:
- Cost/initial value, peak balance/value, and closing value (31 December), where applicable
- Income accrued or received, converted to INR using SBI TT buying rate
- Portion of income chargeable to tax in India
- Corresponding ITR schedule where that income has been offered to tax
- Nature of ownership: Legal owner / Beneficial owner / Beneficiary
Definitions used in Schedule FA
- Beneficial Owner: Person who directly/indirectly provides consideration and holds for present or future benefit.
- Beneficiary: Person who derives benefit although consideration was provided by someone else.
- If both legal and beneficial owner, disclose under Legal Owner.
Key Compliance Points
- Calendar year for AY 2026–27 refers to 1 Jan 2025 – 31 Dec 2025.
- Exchange rate: Use SBI telegraphic transfer buying rate for converting foreign amounts into INR.
- Foreign assets reported in Schedule FA must also be reported in Schedule AL where applicable.
- Maintain supporting documents: foreign statements, tax certificates, exchange rate proofs, trust deeds, etc.
Common Errors to Avoid
- Not matching income reported in FSI with income shown in main ITR heads
- Filing FTC claim without Form 67
- Missing beneficial ownership disclosures
- Using incorrect exchange rate or date
- Not summing country-wise entries correctly in Schedule TR
A well-prepared FSI, TR, and FA ensures accurate foreign income reporting, smooth FTC claims, and avoids notices or mismatches during assessment. This structure can also serve as a checklist for professionals assisting clients with cross-border tax matters
