Do you hold any assets outside India or have you earned any income in foreign currency? Have you reported such foreign assets and foreign incomes while filing your income tax returns?
Who need to report foreign assets and foreign incomes?
A resident assessee need to provide the details of foreign asset or income from any source outside India while filing the income tax return (ITR).
What are the types of residential status of individuals?
An individual may be –
- Resident and ordinarily resident in India
- Resident but not ordinarily resident in India
- Non-resident in India
The residential status of an individual is defined as below –
| Conditions | Resident and ordinarily resident in India | Resident but not ordinarily resident in India | Non-resident in India | ||
| He is in India in the previous year for 182 days or more OR He is in India for 60 days or more during the previous year and 365 days or more during 4 years immediately preceding the previous year |
Yes | Yes | Yes | Yes | No |
| He has been resident in India in at least 2 out of 10 previous years immediately preceding the relevant previous year | Yes | Yes | No | No | NA |
| He has been in India for 730 days or more during 7 years immediately preceding the relevant previous year | Yes | No | Yes | No | NA |
How to calculate the value of foreign asset or foreign income?
The rate of exchange for the calculation of the value in rupees of asset situated outside India or any income accruing / arising / received in foreign currency shall be the ‘telegraphic transfer buying rate’ of such currency as on the specified date.
What is telegraphic transfer buying rate?
"Telegraphic transfer buying rate", in relation to a foreign currency, means the rate of exchange adopted by State Bank of India (SBI) for buying such currency, where such currency is made available to that bank through a telegraphic transfer.
While SBI publishes the rates daily, barring Sundays and bank holidays, on its website, the historical data of rates is unavailable. You can access the historical data of exchange rates published by SBI at https://mksco.in/forexrate/. For the purpose of tax filing, use the ‘TT Buy’ rate on the second page of the rate card.
Which are the applicable schedules for reporting foreign asset or foreign income?
The following are the applicable schedules of ITR form for reporting of foreign asset or foreign income –
- Schedule Foreign Source Income (FSI)
- Schedule TR
- Schedule FA
What is Schedule Foreign Source Income (FSI)?
- In Schedule Foreign Source Income (FSI), you need to report the details of income, which is accruing / arising / received from any source outside India.
- This schedule is available for residents only.
- The rate of exchange for the calculation of the value in rupees of any income accruing / arising / received in foreign currency shall be the ‘telegraphic transfer buying rate’ of such currency as on the specified date.
What is specified date for Schedule Foreign Source Income (FSI)?
The specified date of the purpose of Schedule Foreign Source Income (FSI) means –
| Nature of Income | Specified Date |
| Income chargeable under the head ‘Salaries’ | Last day of the month immediately preceding the month in which the salary is due, or is paid in advance or in arrears |
| Income by way of ‘interest on securities’ | Last day of the month immediately preceding the month in which the income is due |
| Income chargeable under the head ‘Profits and gains of business or profession’ in the case of a non-resident engaged in the business of operation of ships | Last day of the month immediately preceding the month in which such income is deemed to accrue or arise in India |
| Income by way of dividends | Last day of the month immediately preceding the month in which the dividend is declared, distributed or paid by the company |
| Income chargeable under the heads ‘Income from house property’, ‘Profits and gains of business or profession’ and ‘Income from other sources’ |
Last
day of the previous year of the assessee |
| Income chargeable under the head ‘Capital gains’ | Last day of the month immediately preceding the month in which the capital asset is transferred |
However, if tax has been deducted at source from such income under Rule 26, the specified date shall be the date on which the tax was required to be deducted as per Chapter XVII-B.
How to fill Schedule Foreign Source Income (FSI)?
- Mention the tax paid outside India on the income declared in Schedule FSI.
- Mention the tax relief available.
- For country code use the International Subscriber Dialing (ISD) code of the country.
- Tax Payer Identification Number (TIN) of the assessee in the country where tax has been paid is to be filled up. In case TIN has not been allotted in that country, then, passport number should be mentioned.
What is Schedule TR?
In Schedule TR, you need to provide a summary of tax relief which is being claimed in India for taxes paid outside India in respect of each country. This schedule captures a summary of detailed information furnished in Schedule FSI.
How to fill Schedule TR?
- Mention the details of tax paid outside India on the income declared in Schedule FSI.
- For country code use the ISD code of the country.
- TIN of the assessee in the country where tax has been paid is to be filled up. In case TIN has not been allotted in that country, then, passport number should be mentioned.
- Relief claimed under section 90 or section 90A or section 91 is to be filled in the respective columns.
What is Schedule FA?
- In Schedule FA, you need to provide details of foreign asset or income from any source outside India.
- This schedule is to be filled by residents only.
- This schedule need not be filled up if you are ‘Not Ordinarily Resident’ or a ‘Non-Resident’.
- The rate of exchange for the calculation of the value in rupees of asset situated outside India shall be the ‘telegraphic transfer buying rate’ of such currency as on the specified date.
What is specified date for Schedule FA?
The specified date of the purpose of Schedule FA means –
- Date of peak balance in the bank account or
- Date of investment
How to fill Schedule FA of ITR form?
Part A – Foreign bank accounts
The peak balance in the bank account during the year is to be filled up after converting the same into Indian currency.
Part B – Financial interest in any entity
Financial interest would include, but would not be limited to, any of the following –
- If the resident assessee is the owner of record or holder of legal title of any financial account, irrespective of whether he is the beneficiary or not.
- If the owner of record or holder of title is one of the following –
- An agent, nominee, attorney or a person acting in some other capacity on behalf of the resident assessee with respect to the entity.
- A corporation in which the resident owns, directly or indirectly, any share or voting power.
- A partnership in which the resident assessee owns, directly or indirectly, an interest in partnership profits or an interest in partnership capital.
- A trust of which the resident has beneficial or ownership interest.
- Any other entity in which the resident owns, directly or indirectly, any voting power or equity interest or assets or interest in profits.
The total investment has to be filled up as investment at cost held during the year after converting it into Indian currency.
Part C – Details of immovable property located outside India
The total investment has to be filled up as investment at cost in immovable property held during the year after converting it into Indian currency.
Part D – Details of other assets located outside India
The total investment has to be filled up as peak investment (at cost) held during the year after converting it into Indian currency. Capital Assets include financial assets which are not included in part (B) but shall not include stock-in-trade and business assets which are included in the Balance Sheet.
Part E – Details of any account located outside India in which the assessee has signing authority
The details of peak balance / investment in the accounts in which you have signing authority and which has not been included in Part (A) to Part (D) has to be filled up as peak investment / balance held during the year after converting it into Indian currency.
Part F – Details of trusts created outside India in which you are settlor, beneficiary or trustee
The details of trusts under the laws of a country outside India in which you are a trustee has to be filled up.
Part G – Other incomes
Part G includes any other income which has been derived from any source outside India and which has not been included in the part A to F and under the head business of profession in the return.
Under all the parts mention income generated / derived from the asset.
What is Form 67?
A resident taxpayer is eligible to claim credit for any foreign tax paid, in a country or specified territory outside India, by way of deduction or otherwise. The credit can be claimed only by furnishing a statement in Form 67 on or before the due date for furnishing the ITR.
Form 67 is also required to be furnished in case the carry backward of loss of the current year results in refund of foreign tax for which credit has been claimed in any earlier previous years.
How to submit From 67?
Form 67 can be submitted only in online mode through the e-Filing portal.
- Log in to the e-Filing portal using user ID and password.
- On Dashboard, click e-File > Income Tax Forms > File Income Tax Forms.
- Select Form 67 or enter Form 67 in the search box to find the form.
- Select the Assessment Year and click Continue.
- On the Instructions page, click Let's Get Started.
- Form 67 is displayed. Fill the required details and click Preview.
- Verify the details and click Proceed to e-Verify.
- Click Yes to e-Verify.
- On successful e-verification, note the Transaction ID and Acknowledgement Number for future reference.
How to fill Form 67?
Form 67 has 4 sections.
- Part A – Entails basic information such as Name, PAN or Aadhaar, Address and Assessment Year. Add receipt details of the income from a country outside India and Foreign Tax Credit claimed.
- Part B – Provide details of refund of foreign tax as result of carry backward of losses and disputed foreign tax.
- Verification – Contains a self-declaration form.
- Attachments – Attach a copy of the certificate or statement and proof of payment / deduction of foreign tax.
References
Income Tax Department. (n.d.). 'File ITR-2 Online User Manual'. Retrieved from https://www.incometax.gov.in/iec/foportal/help/how-to-file-itr2-form
Income Tax Department. (n.d.). 'Form 67 User Manual'. Retrieved from https://www.incometax.gov.in/iec/foportal/help/statutory-forms/popular-form/form67-um#:~:text=A%20resident%20taxpayer%20who%20has,to%20claim%20credit%20of%20such
Income Tax Department. (n.d.). 'Instructions for filling out FORM ITR-2'. Retrieved from https://incometaxindia.gov.in/Supporting%20Files/2015/InstructionITR2_2015_ENG.pdf
Income Tax Department. (n.d.). 'Rate of exchange for conversion into rupees of income expressed in foreign currency'. Retrieved from https://incometaxindia.gov.in/Rules/Income-Tax%20Rules/103120000000007546.htm
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