Reporting Foreign Assets and Global Income: A Must-Know Guide for NRIs

Reporting Foreign Assets and Global Income: A Must-Know Guide for NRIs

🗓️ June 29, 2025

Navigating Indian tax laws can feel like a maze, especially for NRIs and returning Indians. After understanding your tax residency status and taxable Indian income (check our earlier articles on NRI Tax Filing Essentials, Residential Status, and What’s Taxable in India), it’s time to tackle a critical yet often overlooked area: reporting foreign assets and global income. If you’re a Resident and Ordinarily Resident (ROR), Indian tax laws mandate full disclosure of your foreign assets and income via Schedule FA in your Income Tax Return (ITR).

Good news for NRIs and RNORs—you’re off the hook for this one! Let’s dive into what you need to know to stay compliant and avoid hefty penalties.

 What’s in This Guide?

  • Who needs to report foreign assets and income

  • What you must disclose in Schedule FA

  • Penalties that could hit your wallet hard

  • Real-world examples to make it crystal clear

  • Common traps to dodge

  • Choosing the correct ITR form

 Who Needs to Report?

If you’re classified as a Resident and Ordinarily Resident (ROR), you’re required to report all foreign assets and income in Schedule FA. This includes:

  • Foreign bank accounts (including NRE/NRO/FCNR accounts held abroad)

  • Stocks and mutual funds in foreign markets

  • Insurance policies or pension accounts

  • Debentures, bonds, or trust holdings

  • Immovable property, like a house or land outside India

  • Signing authority in any foreign account

NRIs and RNORs: You’re exempt from filing Schedule Foreign Aseets (FA), so you can breathe easy!

 Pro Tip: Even assets you acquired as an NRI must be reported once you become an ROR. Don’t let your past NRI status fool you!

 What Must You Disclose?

As an ROR, you need to report any foreign assets held during the previous year. Here’s what’s on the radar:

  • Foreign bank accounts: Yes, even NRE/NRO/FCNR accounts are held outside India.

  • Financial interests: Think stocks, mutual funds, or pension plans.

  • Immovable property: Own a condo in Dubai or a plot in London? It’s reportable.

  • Trusts or companies: If you’re a trustee, settlor, or beneficiary, disclose it.

  • Other capital assets: Any other investments or holdings abroad.

Why it matters: Transparency is key to staying compliant and avoiding scrutiny from Indian tax authorities.

 Is Your Global Income Taxable?

If you’re an ROR, the answer is a resounding yes:

  • All global income—interest, dividends, capital gains, rental income, or business profits earned abroad—is taxable in India.

  • You’ll need to report these in Schedule FA and include them in your taxable income.

For NRIs and RNORs:

  • Only income sourced in India is taxable. Your global earnings stay out of India’s tax net.

 Real-Life Example

Imagine you moved back to India in April 2023 and qualified as an ROR for FY 2023–24 (AY 2024–25). You earn $5,000 in rental income from a property in Dubai and hold $10,000 worth of shares in a U.S. company. Both the rental income and any dividends or gains from those shares must be reported in Schedule FA, and the rental income is taxable in India.

 Did You Know? Double Taxation Avoidance Agreements (DTAAs) can significantly reduce your tax burden by allowing credits for taxes paid abroad. We’ll cover how to leverage DTAAs later, providing you with a sense of relief!

 Which ITR Form Should You Use?

Do foreign assets or income? Say goodbye to the simpler ITR-1 and ITR-4 forms. Here’s what to use:

  • ITR-2: Ideal for income from salary, house property, capital gains, or foreign assets.

  • ITR-3: Use this if you also have a business or professional income.

Choosing the wrong form can lead to rejected filings or penalties, so double-check your eligibility!

 Penalties: Don’t Risk It!

Under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, non-compliance can sting:

  • ₹10 lakh penalty per undisclosed asset—that’s a hefty price for oversight!

  • In extreme cases, you could face prosecution.

Good news: NRIs and RNORs are exempt from these penalties, as Schedule FA doesn’t apply to you.

 Common Mistakes to Avoid

Don’t fall into these traps:

  • Assuming NRE/NRO/FCNR accounts held abroad are exempt from reporting.

  • Forgetting to disclose jointly held foreign accounts or assets.

  • Filing ITR-1 or ITR-4 when you’re required to report foreign assets.

  • Ignoring small amounts of foreign dividends, interest, or rental income as an ROR.

Pro Tip: Even a single overlooked foreign account could trigger penalties. When in doubt, disclose!

 Your Path to Compliance

Whether you’re sipping coffee in Dubai, closing deals in New York, or settling back in India, your global assets and income could create tax responsibilities you can’t ignore. Transitioning to ROR status expands your compliance obligations, but it doesn’t have to be overwhelming.

At Angel Services, we make it simple by:

  • Advising on your correct residency status

  • Guiding you to the correct ITR form

  • Ensuring accurate Schedule FA disclosures

  • Helping you claim DTAA relief to avoid double taxation

 Let’s make your global journey tax-compliant and stress-free! Ready to get started? Contact us at Angel Services for expert guidance tailored to NRIs and returning Indians.