This Article was fact checked and last updated for accuracy on April 21, 2025 by Mani Karthik
Ah, tax season. My favorite time to question all my life decisions. Including the one where I moved back to India.
Hello folks! Mani here. The guy who thought declaring foreign assets would be “straightforward.” Ha! Good one, past Mani.
When I returned to India in 2017, I had more foreign assets than common sense. The IT department and I developed a special relationship that year. They sent notices. I sent panic emails to my CA at 2 AM.
Let me save you from my mistakes. And from terrifying middle-of-the-night tax nightmares.
The Schedule FA Monster 👹
Schedule FA. Foreign Assets. Sounds simple. It’s not.
My first attempt at filing Schedule FA looked like abstract art. My CA actually laughed out loud. Then charged me extra.
This form requires you to declare EVERY foreign asset. Every. Single. One.
| Asset Type | Required Details | Penalty for Non-Disclosure |
|---|---|---|
| Bank Accounts | Account number, peak balance, interest earned | ₹10 lakh (flat) |
| Properties | Address, acquisition cost, current value | ₹10 lakh (flat) |
| Stocks/Mutual Funds | Name, units held, purchase price, current value | ₹10 lakh (flat) |
I missed declaring an old 401k account. The potential penalty was larger than the account itself. I aged five years that week.
Bank Accounts: The Full Monty 🏦
Your foreign bank accounts need complete disclosure. Even that savings account you opened in college with $25.
I had forgotten about a Bank of America account with exactly $18.72. The IT department somehow hadn’t forgotten though.
| Required Information | Example | My Mistake |
|---|---|---|
| Name of Bank | Bank of America | Wrote “BoA” (abbreviations not accepted) |
| Account Number | XXXXXXXX1234 | Gave current number (need all accounts held during year) |
| Peak Balance | $10,456 | Reported year-end balance (wrong!) |
| Interest Earned | $112 | Forgot to include (oops) |
I once submitted bank statements in dollars. The IT department wanted rupees. I had to refile. My CA’s children now attend expensive private schools thanks to my mistakes.
Investment Accounts & Securities 📈
All your foreign investments need declaration. All of them.
My first Schedule FA listed “Various US stocks.” My CA asked if I was trying to go to jail. Apparently “various” isn’t specific enough for tax purposes.
| Asset Type | Details Required | Common Error |
|---|---|---|
| Individual Stocks | Name, units, acquisition date, cost, current value | Missing acquisition details |
| Mutual Funds | Fund name, units, NAV at purchase, current NAV | Converting to INR at wrong exchange rate |
| Retirement Accounts | Account type, total value, contributions during year | Not breaking down by investment type |
I owned fractional shares of 37 companies through Robinhood. I had to list each one individually. I now understand why accountants drink.
Foreign Property: The Valuation Game 🏠
If you own property abroad, welcome to valuation hell.
I owned a small condo in California. Determining its “fair market value” for Indian tax purposes was like trying to translate Shakespeare into emoji.
| Valuation Method | Pros | Cons |
|---|---|---|
| Recent Appraisal | Most accurate | Expensive to obtain |
| Tax Assessment Value | Official document | Often lower than market value |
| Purchase Price + Appreciation | Easy to calculate | May not reflect current value |
I used Zillow’s estimate. My CA laughed again. We had to get a proper valuation letter. Apparently, random website algorithms aren’t acceptable tax documentation. Who knew?
Life Insurance & Pension: The Forgotten Assets 💰
Foreign life insurance policies with investment components need declaration.
I had a small whole-life policy. Forgot to declare it. The correction process took longer than the remaining life expectancy the policy was based on.
| Asset Type | What to Report | Where to Find It |
|---|---|---|
| Life Insurance | Cash surrender value | Annual statement |
| Pension Accounts | Total corpus value | Year-end statement |
| Social Security | Not required unless receiving payments | N/A |
My pension statement was 22 pages long. The relevant number was on page 17, footnote 3, in tiny print. I missed it the first time. And the second time.
Reporting Financial Interest & Signing Authority 🖋️
If you have signing authority or financial interest in foreign accounts, these need declaration too.
I was a signatory on my elderly aunt’s US account to help her pay bills. Guess what? That needed declaration in India. Found that out during a “routine review.”
| Relationship Type | Reporting Requirement | My Experience |
|---|---|---|
| Joint Account Holder | Full disclosure required | Forgot my wife’s name was on account too |
| Signatory | Full disclosure required | Didn’t know this was needed |
| Beneficial Owner | Full disclosure required | Had no idea what this meant for months |
The definition of “financial interest” is broader than you think. Much broader. Think “if you can vaguely smell the money” broad.
Exchange Rate Gymnastics 💱
All values must be converted to INR. Sounds simple. It’s not.
I used Google’s exchange rate for my first filing. Wrong. The IT department has specific rates they accept.
| Conversion Timing | Rate to Use | My Costly Error |
|---|---|---|
| For bank balances | SBI TT buying rate as on last day of financial year | Used random March 31 Google rate |
| For purchased assets | SBI TT buying rate on date of acquisition | Used rate at time of filing (big difference!) |
| For sold assets | SBI TT buying rate on date of sale | Completely missed this calculation |
Getting the exchange rate wrong is like telling the IT department “please audit me more thoroughly.” They love that.
The FBAR Connection: Double Trouble 🌐
For US citizens/green card holders, there’s FBAR filing with the US. And Schedule FA with India.
The information overlaps but isn’t identical. I tried to copy-paste between them. Big mistake.
| Requirement | FBAR (US) | Schedule FA (India) |
|---|---|---|
| Threshold | $10,000 across all accounts | All assets regardless of value |
| Deadline | April 15 with extension | July 31 (usually) |
| Penalties | Can be severe | Definitely severe |
I messed up both filings the first year. Achieved international tax trouble. A rare accomplishment.
The CA Relationship: Worth Every Rupee 💼
Get a CA who specializes in NRI taxation. Not your cousin’s friend who “knows about taxes.”
I tried to save money by using a general CA. Ended up paying three times more fixing the mistakes.
| CA Type | Cost Range | Value Proposition |
|---|---|---|
| General CA | ₹5,000-15,000 | Might miss NRI specifics |
| NRI Specialist | ₹15,000-40,000 | Knows foreign asset declaration intricacies |
| Big 4 Firm | ₹40,000+ | For complex situations |
My NRI specialist CA costs more than my first car in India. And is worth every rupee. He’s saved me from financial disasters that would make horror movies look pleasant.
Documentation: Hoard Like a Tax Dragon 🐉
Keep EVERYTHING. Every statement. Every purchase record. Every receipt.
I deleted some old investment statements thinking “who needs these?” The answer: The Indian Income Tax Department needs these.
| Document Type | Retention Period | Storage Method |
|---|---|---|
| Account Statements | Minimum 7 years | Digital + Physical Backup |
| Purchase Records | Forever for assets still owned | Digital + Physical Backup |
| Tax Filings | Forever | Digital + Physical Backup |
I now have a digital archive that could survive nuclear war. And a physical backup in case digital formats become obsolete. I’m prepared for tax apocalypse.
Final Words From a Tax Battle Survivor 🛡️
Declaring foreign assets is complicated. But not impossible.
I’ve gone from tax confusion to tax competence. Still not tax confidence. That might require another lifetime.
Take it seriously. Be meticulous. Hire experts.
And remember: The peace of mind from proper compliance is worth more than whatever you might save trying to cut corners.
I sleep better now. Except during tax season. Then I still wake up in cold sweats. But fewer cold sweats than before!
Got questions about Schedule FA and foreign asset declaration? Drop them in the comments. I’ve made enough mistakes to write a “How Not To File Taxes” encyclopedia.
Sources and Helpful Links:
- Income Tax Department of India (Official Guidelines): https://www.incometaxindia.gov.in/Pages/international-taxation/foreign-assets.aspx
- Reserve Bank of India – FEMA Regulations: https://www.rbi.org.in/Scripts/Fema.aspx
- Foreign Exchange Dealers Association of India (Exchange Rates): https://www.fedai.org.in/
- CBDT Circular on Foreign Asset Declaration: https://www.incometaxindia.gov.in/communications/circular/circular_12_2022.pdf
- Back to India Movement – Tax Resources for Returning NRIs: https://backtoindia.com/tax-resources/
- NRI Taxation Handbook 2023-24 (CA Association of India): https://www.icai.org/post/handbook-on-foreign-exchange-transactions