Non-disclosure of foreign assets, income can attract ₹10 lakh fine

Misreporting may invite penalty up to 200 per cent of the tax due

- SANJEEV SINHA

In April 2025, $2.5 billion flowed out of India under the liberalised remittance scheme (LRS), with investment-related remittances surging around 105 per cent year-on-year. As the mutual fund route for overseas investments is frequently unavailable, many investors are using the LRS route (the total outgo via this route in FY 2024-25 stood at $29.56 billion). Such investors must ensure that they file their income-tax return (ITR) accurately.

Choose right ITR form, schedules Resident investors holding foreign assets or earning income from foreign securities must file ITR-2 or ITR-3. "Use ITR-2 if you do not have income from business or profession, and ITR-3 form if you have income from those sources," says Poorva Prakash, partner, Deloitte India.

All foreign assets, including securities, must be disclosed in Schedule FA (Foreign Assets). "Resident and Ordinarily Resident (ROR) individuals and Hindu Undivided Families (HUFs) must report under Schedule FA, irrespective of whether any income from such assets is taxable in India. Even dormant or low-value holdings must be declared," says Abhishek Soni, co-founder, Tax2Win.

Income from foreign sources should be reported in Schedule FSI (Foreign Source Income). To claim tax relief, use Schedule TR (Tax Relief). Gains or losses from the sale of foreign securities should be reported under Schedule CG (Capital Gains), while dividends, interest or other income should be reported in Schedule OS (Income from Other Sources).