Schedule FA in ITR-2: Reporting Foreign Assets in India (FY 2025–26 Complete Guide)

For taxpayers who hold foreign assets or bank accounts, reporting in the Income Tax Return (ITR-2) is mandatory under Schedule FA.

The FY 2025–26 update retains the reporting requirement, emphasizing full disclosure of:

• Bank accounts abroad

• Financial interest

• Immovable property

• Other assets outside India

Failure to report can attract penalties, prosecution, or addition of undisclosed income.

This blog explains how to report FA correctly, with examples, compliance tips, and FAQs.

---

Who Should File Schedule FA in ITR-2?

Schedule FA is applicable to:

• Resident Indians who hold foreign assets

• NRIs whose Indian income requires reporting

• Individuals with joint foreign accounts or assets

• Shareholders or beneficiaries of foreign entities

Note: ITR-2 is mandatory; ITR-1 (Sahaj) does not support FA reporting.

---

What Constitutes “Foreign Assets”?

According to Income Tax rules, the following must be reported under Schedule FA:

Important: Even if the account or property has nil balance, disclosure is mandatory.

---

Step-by-Step Guide to Filling Schedule FA in ITR-2

Step 1: Identify Your Foreign Assets

• List all bank accounts, investments, property, and others abroad

• Include jointly held assets proportionate to your share

Step 2: Collect Details

• Country of asset

• Opening/closing balance in foreign currency

• Value in INR (conversion using RBI/telegraphic transfer rates)

Step 3: Fill FA Schedule in ITR-2

• Open ITR-2 Form

• Go to Schedule FA

• Fill the following sections:

---

Example: Reporting a Foreign Bank Account

• Account in USA: USD 10,000

• RBI TT rate on 31 Mar 2026: 1 USD = ₹83

• Value in INR: ₹8,30,000

Schedule FA Entry:

---

Common Mistakes to Avoid

1. Not reporting joint account shares

2. Reporting in foreign currency instead of INR

3. Missing immovable property abroad

4. Omitting dormant accounts or zero balance accounts

5. Late filing or incorrect FA reporting leading to penalties

---

Penalties for Non-Compliance

• Section 271 F: Penalty up to ₹1,00,000 for failure to furnish FA details

• Income addition under Section 69: If undisclosed income/assets are detected

• Prosecution in severe cases

---

Tax Planning Tips for Foreign Assets

1. Keep accurate documentation of all foreign holdings

2. Use double taxation avoidance agreements (DTAA) to prevent double tax

3. Repatriation planning for dividends, interest, or sale proceeds

4. Coordinate foreign asset reporting with global income

5. Consult WonderTax experts for compliance and optimization

---

FAQ Schema

Q1: Do I need to report foreign bank accounts with zero balance?

Yes, even zero or dormant accounts must be disclosed.

Q2: Do NRIs filing ITR-2 need Schedule FA?

Only if they have foreign assets relevant to Indian taxation.

Q3: Can I use approximate values for foreign assets?

No, exact values converted to INR as per RBI/telegraphic rates are required.

Q4: What if I miss reporting FA?

You may face penalties under Section 271 F and possible addition of undisclosed income.

---

Conclusion

Reporting foreign assets under Schedule FA is mandatory for compliant taxpayers. Proper disclosure ensures:

• Avoidance of penalties

• Smooth ITR processing

• Transparency with tax authorities

• Efficient global tax planning

WonderTax can help you prepare ITR-2 with Schedule FA and ensure 100% compliance with FY 2025–26 rules.

---

CTA

👉 Need help with Schedule FA or ITR-2 filing?
Contact WonderTax experts for:

• Accurate FA reporting

• Penalty-free compliance

• Tax-efficient repatriation strategies

🔗 https://wondertax.in/contact-us