FA REPORTING: MINOR OVERSIGHTS, MAJOR CONSEQUENCES

Foreign assets, income should be disclosed by residents in Schedule FA to avoid penalties

- VIJAYKUMAR PURI

Every year, May brings the familiar rush of filing tax returns. For many salaried and investing Indians, filing income tax returns is a ritual, yet there's one part of the return that even diligent taxpayers stumble over—Schedule FA, the disclosure of foreign assets. This schedule is often ignored, misunderstood or filled perfunctorily. "It doesn't affect my taxable income," the logic goes, "so why bother?" That's a risky assumption. Schedule FA is not about how much tax you pay. It's about disclosing your offshore financial footprint. And the government takes that disclosure very seriously.

Why FA matters more than you think If you're resident and ordinarily resident, the rule is simple: disclose both foreign assets and foreign-source income. The moment you own any foreign assets, legally or beneficially, (e.g., a second home in Dubai, buying foreign shares via an investing app, holding ESOPs/RSUs of your MNC employer's foreign parent) or earn any overseas income, Schedule FA becomes your responsibility. On paper, it's "just a disclosure." But fail to report it and the penalties escalate quickly.