Schedule FA - Foreign Stocks

Income Tax
1

I have an account with a foreign broker which I use to buy US stocks.
Sources of income with this foreign broker account:

  • Interest income from broker
  • Dividend income from US stocks
  • Capital gains from US stocks

Not sure in Schedule FA whether I should fill A2 or A3.
Reasons why I think A2 is appropriate:

  • I have cash balance at the broker
  • I get interest income from the broker on that cash balance
    The above two points cannot be accommodated in A3

But I also cant skip A3, because I am the BO of the US stocks, so need to provide details of the US stocks in A3.

Wont filling both A2 and A3 result in double reporting, because A2 already includes all the details for A3?

2

Hi @KapilS

Based on the information you provided regarding your income sources with the foreign broker account, it appears that option A3 is the more appropriate choice for your situation.

Option A3 in Schedule FA specifically captures details related to foreign equity and debt interest, which includes dividend income and capital gains from US stocks. As you mentioned, you are the beneficial owner of the US stocks, therefore, you need to provide the relevant details of those stocks in A3.

On the other hand, option A2 is intended for disclosing information about foreign custodial accounts, including any beneficial interest held, it is primarily meant for reporting cash balances or holdings in custodial accounts that do not involve equity or debt interest.

Hence, to report income from interest, dividend, and capital gains from US stocks, we recommend selecting option A3 in Schedule FA.

3

Thanks for the reply.

The way this broker works is first I have to add funds in USD to the broker account, and then use the cash balance to buy US stock. In my case, the cost of the stocks I purchased was less than the funds I added to the broker. Hence I had a cash balance and broker paid interest on that cash balance.

How will I include the cash balance and interest on the cash balance in A3?

4

@KapilS Maybe you can include the cash balance & interest in A2, and everything else in A3? That way there is no duplicate reporting?

5

Hi @KapilS

The total funds you have invested in US stocks should be reported under A3. The remaining cash balance you have in your broker account is considered an asset and should be added in A2.

And the interest earned on the cash balance should be reported as income, which will be included in the FSI (Foreign Source Income) section of ITR.

7

Hi @aman

Since there is no holding in the E-trade account, there is no disclosure requirement.

If you’ve no vested ESOPs, then also there is no disclosure requirement.

However, Schedule FA -A3 must be filed in case of foreign equity & debt interest holdings.

10

Hi @aman

  1. Since you’ve not bought those shares and hence you don’t own them (i.e, not exercised), there is no requirement for you to disclose the same.

  2. There was no need to show it also last year, nor even this year, as there is no holding. It’s just an active account hence no liability to disclose the same.

Hope this clarifies.

1 Like
11

Hey @Shrutika_Shah,

I have some foreign stocks and have already filed a return using Quicko. I went to filed a revised return, downloaded the JSON and uploaded it on the ITD website. But there is no option to file Schedule FA now. It uploads it and directly takes me to the e-verification stage. How do I upload JSON and also add Schedule FA?

12

Hi @smanek

You are required to report all your foreign holdings under Schedule FA while filing your ITR.
As of now, Quicko does not support this feature, hence you’ve 2 alternatives:

  1. Quicko DIY: Prepare your Income Tax Return on Quicko, download the JSON , upload it on IT Portal Utility > Add Schedule FA, and file the ITR using the income tax utility.
  2. Quicko MEET: Book a MEET, where a tax expert from our team can help you add schedule FA, review the entire ITR, and file taxes for you.

If you still face issues, please Submit a ticket : Help Center

Hope this helps.