Vetri Kondan was allotted foreign ESOP shares when he was working for an MNC having its offsite DC in Chennai. He quit his job and pursued his freelance career as a consultant. Vetri’s AIS reflects Foreign Assets and dividend income from calendar year 2022 to 2024. He had not disclosed his foreign assets nor the income earned from them so far in his ITR as they did not reflect in AIS in the past and he had not given much though to that source at all. With the Foreign Assets Investigation Unit (FAIU) of the Income Tax Department in India scrutinising and issuing notices in full swing, Vetri is concerned and confused as to what is the “right thing to do”.


Foreign Assets Reporting in ITR

Resident Indians must disclose all foreign assets, including bank accounts, foreign ESOPs, and real estate, in Schedule FA of their Income Tax Returns (ITR). This applies even if your income is below the taxable limit. Failure to disclose foreign assets in ITR may trigger Assessment proceedings under the Black Money (Undisclosed Foreign Income and Assets)and Imposition of TaxAct, 2015. Penalty of Rs.10 lakh can be levied, if the aggregate value of an asset or assets(other than immovable property) exceed 20 lakh rupees.

AIS reflecting Foreign Assets from CY 2022-2024

AIS now shows foreign assets and income from calendar years 2022 to 2024, while the current ITR covers only assets and income for the period from 1st January to 31st December 2025. Although this historical information need not be reported in this year’s return, it may require you to verify past disclosures, correct omissions, or flag inaccuracies.

Foreign Assets held during past years – What must you do?

If you held foreign assets during the past years and you had duly disclosed them in the respective year’s ITR, then no further action is required. However, if you held any foreign asset during the past years and missed out any or all of them, you must file a rectification return (if eligible).

Ensure that you report these Foreign Assets in your ITR filed for AY 2026-27 if they were held anytime during the calendar year 2025.

Foreign Income earned during past years – What must you do?

If you had earned foreign income like divided, interest, rent, etc during the past years and you had duly disclosed them in the respective year’s ITR, then no further action is required. However, if you earned any foreign income during the past years and missed out any or all of them, you must file an updated return (ITR-U) to avoid penal consequences.

Do not miss to include your foreign income for the current year in your ITR for AY 2026-27.

How can we help you?

Various clauses from the Income Tax Act may be simplified in online contents. But most of the time, it requires professional help in identifying suitable route for specific instances. Similar to nurturing and taking care of personal health, it is important to also keep a tab on one’s financial health. We at Chockalingam Unnamalai & Associates, can help you understand the pros and cons of various choices you make in the context of personal taxation. You can bank on us for a stress free tax filing and related compliances.

Call us at +91 73050 56628 or drop a mail to frontoffice@onesourcevault.com

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