What is Schedule FA?

Income Tax
1

As India becomes more connected to the global economy, it’s essential for taxpayers to disclose their financial holdings and any income earned abroad.

The Income Tax Department has taken to Twitter to request taxpayers holding foreign bank accounts or assets, as well as those receiving income from abroad, to fill Schedule FA in their Income Tax Return (ITR) for AY 2023-24.

So, what exactly is Schedule FA?

If you’re a taxpayer in India and you have foreign assets, the Income Tax Department wants to know about them. Schedule FA is the form you use to report these assets.

Foreign assets can include things like bank accounts held outside India, properties owned abroad, investments in foreign companies, RSUs or ESOPs received from employers outside India, or any other financial assets situated outside the country.

The ITR Forms for FY 2022-23/ AY 2023-24 have changed to simplify things for taxpayers. They replaced the term “accounting period” with something more straightforward - “calendar year ending as on 31st December 2022.”

What does that mean? It means that when you file your return for the AY 2023-24, you need to provide details about any foreign assets you held between 01-01-2022 and 31-12-2022. It doesn’t matter if the foreign country follows a different fiscal year. As long as you had the specified foreign assets on 31-12-2022, you need to report them. This change eliminates any confusion or miscalculations about the reporting period.

Why is Schedule FA important?

Schedule FA’s purpose is to ensure taxpayers disclose their foreign assets and comply with Indian tax laws. It helps the Income Tax Department keep track of their global financial holdings.

In addition to the above, the taxpayer can also avoid paying double tax on the same income by claiming relief under the DTAA (Double Taxation Avoidance Agreement).

Who needs to report in Schedule FA?

Reporting in Schedule FA is mandatory for a taxpayer who is a resident of India. This schedule is not required to be filed by a taxpayer who is a non-resident (NR) or Not ordinarily Resident (NOR).

What is the penalty for the non-disclosure of Schedule FA in your ITR?

Failing to report your foreign assets accurately or not disclosing them at all can lead to some serious consequences such as:

  1. A penalty of ₹10 lakhs under the Black Money and Imposition of Tax Act, 2015.
  2. Not disclosing foreign assets in Schedule FA while filing your ITR is considered a willful attempt to evade taxes. This can lead to imprisonment for up to 7 years.
  3. Non-declaration also revokes your right to claim relief under the DTAA for your foreign income.

So, to ensure you stay on the right side of the law and avoid these penalties, file your ITR and correctly report schedule FA for FY 2022-23/AY 2023-24 before 31st July 2023.

2

Hi Team,

Do i need to disclose my US Equity holding in ITR, althought i have not incurred and Capital Gains and not received and any Dividend income from the same.

If Yes, where do i do it when filling my ITR from Quicko.

Thanks ,
Mitesh Kale

3

Hi @Mitesh_Kale

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.

Hope this helps.

1 Like
4

Hi @Shrutika_Shah

Good Morning,

Please clarify, My consultant has filed the ITR for AY 23-24 but missed the schedule FA, Now I need to revise the return by adding schedule FA , I have only Equity shares , no dividend no capital gains.
If I opt for Quicko MEET , Please let me know the fees , and if possible can you please share an example w.r.t adding Schedule FA.

Regards
Sridharan

5

Hi @sridharan_K,

You can definitely file a revised return. Since you’ve foreign equity holding, you must report them under schedule FA.
You can book a MEET using this link > click here.
You can refer to the user manual of the ITD which shows how to add schedule FA in your ITR.

Hope this helps!

6

Thank you @Shrutika_Shah for the quick response, it was helpful

Regards
Sridharan

7

Hi Team,

Thanks for sharing details on Schedule FA

Could you please clarify on below queries?

  1. I have sold RSU on the date of vesting itself in the month of march and received Cash after deducting TDS. Do I need to report sale proceeds in FA schedule for A.Y. 2023-24? as the same has been shown in Form 16 for A.Y. 2023-24.

  2. Do I need to report Depository details in FA schedule even if we don’t hold any shares at the year end?

  3. Initial investment value to be shown as “0”? as there is no cost attached to it.

  4. Peak value to be reported for the holding period in my case I have sold on the same day. Do I need to show sale value as Peak value?

  5. Is Closing value is “0” if we don’t hold shares at year end?

  6. Do I need to report in Schedule CG as “0” for these RSU’s

7.If the RSU’s sold in march need not to be reported in A.Y.2023-24 then do I need to report in A.Y. 2024-25?

  1. For suppose if we receive 30 shares and 14 shares have been held by broker, do we need to report sale proceeds in FA schedules as 16 * FMV or 30 * FMV, in Form 16 perquisites value shown as 30 * FMV and TDS has been deducted on the same.
8

Thanks @Shrutika_Shah for the reply, much appreciated.

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Hi @Teja

With regard to your questions,

  1. Yes, if you have sold RSUs you must report them under schedule FA.
  2. Yes, Depository details in schedule FA needs to be reported even if we don’t hold any shares at the year-end.
  3. Yes you can enter the investment value to be 0.
  4. Yes, peak value should be the same as sale value
  5. Yes.
  6. You can enter the gains in Schedule CG.
  7. It is to be reported in AY 2023-24.
  8. Yes, you have to report 16 shares *FMV as sold and 14 shares *FMV as closing balance.

For any other queries, you can also Ask an Expert.

Hope this helps.

10

Now clarified, Thank you so much @Shrutika_Shah .

11

Hi,

I have foreign stocks. Im filling A3 table of FA schedule. It ask for following details.

  1. Date of acquire
  2. Initial cost
  3. Peak value
  4. Total gross amount paid/credit
  5. Total gross proceeds from sell

I understand all except 4th requirement. What Im supposed to fill in this box?

Assume I bought 10 share of Google on 15/06/2022 at 100 usd rate. And received 10 usd dividend on 15/09/2022. And sold 2 shares on 15/12/2022 at 110 rate.

Could you please fill 1 a3 table entry using above information? Calculation in $ is sufficient, no need to convert to inr.

Thanks

12

Hi @pankaj001

You are required to enter any dividend received in the 4th requirement (Total gross amount paid/credit).
If there is no dividend, you can enter 0 can proceed.

1 Like
13

Hi Team,

One last query

Can you please advise on Depository Account and Custodial Account in Table A1 and Table A2

If we have brokerage Account or Company has created one on behalf of us to hold RSU’s or ESOP in foreign country, do we need to report brokerage account details in Table A2?

(I have noted that Table A1 requires interest details but Table A2 requires CG, Dividend, Interest, Others etc., I am assuming we need to report brokerage details in Table A2 please confirm)

Thanks in advance.

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Hi @Teja

In Table A1 you’re required to report the Depository account and in Table A2 you are required to report the Custodial account.

If you hold RSUs or ESOP then you’re required to report in A3.

15

Thanks @Shrutika_Shah but need clarification regarding Brokerage account

Is Brokerage Account a Custodial or Depository Account?

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Hi @Teja

A brokerage account is a custodial account.

As per the law, a custodial account means an account (other than an insurance contract or annuity contract) for the benefit of another person that holds one or more financial assets.

17

Thank you so much @Shrutika_Shah

I will report broker details in Table A2 in Schedule FA

18

I have a Rollover IRA / 401k retirement brokerage account in USA that holds mutual funds. Dividends are reinvested every quarter to the same fund. I returned to India 20 years ago.

  1. Do I have to report 401k balance in schedule FA every year? If yes, under which table do I report?
  2. Dividends are reinvested. Do I have to show them as interest received for that financial year in schedule FA?
  3. Note that this is a retirement account like NPS in India. No tax in US unless we withdraw. So, no tax in India as well. The only question is, how do I make sure that I declare in schedule FA properly if it needs to be declared.
  4. In terms of dates of acquisition, do I have to use the date the account was opened or the start date of the funds that I currently own in that account?
19

Hi @infi

Yes, you have to declare this 401k balance in schedule FA in Table A1. You will have to declare the account number, account opening date, and closing as of 31 Dec 2022 for FY 2022-23 filing.
Also, the dividend received will be declared as other source income as a foreign dividend in your ITR.

For any other queries, you can Ask an Expert

20

Thanks for the clarification. The dividends received is non-taxable since it is a retirement account like NPS. Where and how do I declare such dividends in ITR if it needs to be declared.