Lesson 3 of 3 · GIFT City Advanced — LRS, TCS & Reporting

Reporting Foreign Assets — Schedule FA and the Black Money Act

A resident who holds assets abroad must report them, and the income from them, in Schedule FA of the income-tax return. This lesson explains what the schedule asks for, the penalty under the Black Money Act for not reporting, and the relief for small holdings.

Fact-checked 8 October 20263 practice questions in the game

Why reporting exists

A resident (and ordinarily resident) individual is taxed in India on worldwide income. Income arising abroad is as much part of the tax return as income arising in India.

For that to work, the tax return has to show what the person holds abroad. Schedule FA of the income-tax return is where foreign assets and foreign income are reported. Shares bought directly on an overseas stock exchange under the Liberalised Remittance Scheme (LRS) are a typical example.

Assets, not only income

Schedule FA asks for the assets themselves as well as the income from them. A holding is therefore reported even in a year when nothing is sold and no income is received.

This differs from the parts of the return that deal with income. A person who thinks only about gains and dividends can miss it: with foreign assets, holding is itself something to report.

The remittance is not the report

Money sent abroad under LRS goes through a bank, with PAN and a declaration to the bank. That paperwork does not replace Schedule FA. The remittance and the tax return are separate obligations, and completing one does not complete the other.

The penalty and the relief

Under the Black Money Act, failure to report a foreign asset in the income-tax return can attract a penalty of ₹10 lakh. The penalty is for the failure to report. It is separate from any tax payable on the income from the asset.

There is relief from this penalty for small holdings: assets other than immovable property whose aggregate value is up to ₹20 lakh. Immovable property abroad is outside the relief whatever its value. How the asset was bought, and how long it has been held, make no difference.

What this lesson does not cover

This lesson is about assets held abroad. It does not address how holdings in the GIFT IFSC itself are reported.

Rules at a glance

Where foreign assets and income are reportedSchedule FA of the income-tax returnCovers the assets themselves and the income from them

Penalty for not reporting a foreign assetCan be ₹10 lakhBlack Money Act

Relief for small holdingsAssets other than immovable property, aggregate value up to ₹20 lakhBlack Money Act

Immovable property abroadOutside the relief, whatever its valueBlack Money Act

Illustration

Nothing sold, still something to report

Neha, 31, a resident in Bengaluru, bought shares on an overseas stock exchange under LRS. During the year she sold nothing and received no dividend, so she assumes the shares need no mention in her return. They do: Schedule FA asks for the asset itself.

Suppose her foreign holdings are shares worth ₹6,50,000, a balance of ₹2,10,000 in an overseas bank account and overseas fund units worth ₹4,40,000 (assumed values). The aggregate is 6,50,000 + 2,10,000 + 4,40,000 = ₹13,00,000, which is within the ₹20 lakh covered by the relief from the penalty. The lesson does not go into how the value is measured for the relief. The relief concerns the penalty; it does not change what Schedule FA asks for. If she also owned a flat abroad, that flat would be outside the relief whatever its value.

Key points

A resident (and ordinarily resident) individual is taxed in India on worldwide income.
Foreign assets and foreign income are reported in Schedule FA of the income-tax return, even in a year with no sale and no income.
The declaration made to the bank for an LRS remittance does not replace Schedule FA.
Under the Black Money Act, failure to report a foreign asset can attract a penalty of ₹10 lakh, separate from any tax on the income.
Relief from the penalty covers assets other than immovable property with an aggregate value of up to ₹20 lakh.

Common misunderstandings

No sale and no income does not mean nothing to report: Schedule FA asks for the foreign asset itself.
Remitting through a bank under LRS is not reporting to the tax department: the return must still carry Schedule FA.
The ₹20 lakh relief does not extend to immovable property abroad, whatever its value.
The ₹10 lakh penalty is not a substitute for tax: it is for failing to report, and tax on the income is separate.

Questions people ask

Does it matter how the foreign asset was bought or how long it has been held?

No. For the relief, what counts is that the assets are not immovable property and that their aggregate value is up to ₹20 lakh.

Is the penalty linked to the tax due on the asset's income?

No. It is for the failure to report and is separate from any tax payable on the income.

How are holdings in the GIFT IFSC reported?

This lesson does not address that. It covers assets held abroad, such as shares bought directly on an overseas stock exchange.

What this lesson relies on

Income-tax return forms — Schedule FA (foreign assets and income from a source outside India)
Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015

This lesson was reviewed independently against these sources on 8 October 2026. Rules change: check the current regulation, scheme document or policy wording before relying on any figure. This is education, not advice.