In today’s interconnected global economy, tax transparency has become crucial for taxpayers with international financial interests. If you hold foreign assets or earn income from overseas sources, understanding CRS and FATCA compliance requirements can help you avoid penalties while ensuring proper tax reporting in India.
What Are CRS and FATCA?
Common Reporting Standard (CRS)
The Common Reporting Standard is an OECD initiative that requires financial institutions worldwide to report information about accounts held by foreign residents. This information gets exchanged between tax jurisdictions annually, creating a global network of tax transparency.
Foreign Account Tax Compliance Act (FATCA)
FATCA is a United States law that mandates foreign financial institutions to report accounts held by U.S. taxpayers to the Internal Revenue Service (IRS). This ensures American citizens and residents properly declare their worldwide income.
Information India Receives under CRS and FATCA
The Income Tax Department receives comprehensive details about Indian residents’ foreign financial accounts through these frameworks.
CRS Data Includes:
- Account holder’s complete information (name, address, TIN)
- Controlling person details for entities
- Resident country codes and nationalities
- Account numbers and balances
- Income details including interest, dividends, and gross proceeds
- Birth information and identification numbers
FATCA Data Includes:
- Account numbers and currency codes
- Entity types (individual or organization)
- Payment details by type (interest, dividends, redemptions)
- Tax identification numbers (PAN for India)
- Complete address and nationality information
- Organization identification numbers (TIN, CIN, GIIN, or Global EIN)
This data helps Indian Income-tax authorities identify taxpayers who haven’t reported their foreign assets and income accurately.
Indian Law Requirements for Foreign Asset Disclosure
The Income-tax Act, 1961 mandates that Indian residents report all foreign assets and income in their Income Tax Returns (ITR). Three specific schedules handle these disclosures:
- Schedule FA (Foreign Assets): Reports all foreign assets
- Schedule FSI (Foreign Source Income): Reports income from foreign sources
- Schedule TR (Tax Relief): Claims tax relief on taxes paid abroad (filed with Form 67)
Penalties for Non-Compliance
Failing to report foreign assets and income can result in serious consequences under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, including:
- Stringent penalties
- Tax assessments
- Potential prosecution
- Legal complications
Benefits of Transparent Tax Reporting
Compliance and Good Governance
Declaring your global income demonstrates commitment to compliance and builds trust with tax authorities, reducing the likelihood of unnecessary scrutiny.
Legal Protection
Complete disclosure protects you from penalties and legal actions under Indian tax laws, providing peace of mind and financial security.
Tax Relief Opportunities
Accurate reporting allows you to claim legitimate tax relief on taxes paid outside India, preventing double taxation and optimizing your overall tax liability.
Contributing to National Development
Proper tax compliance ensures funds are available for public services and infrastructure, supporting India’s growth and development.
Selecting the Right ITR Form
ITR-1 and ITR-4 do not include Schedule FA. If you have any foreign assets or income, you must use an ITR form other than ITR-1 or ITR-4 that contains Schedule FA.
Using the wrong form can result in incomplete disclosure and potential compliance issues.
How to Complete Schedule FSI: Foreign Source Income
Who Needs to File
Indian residents who earn income from sources outside India must complete Schedule FSI. This income must also be reported in the appropriate head-wise computation of total income.
Required Information
Country Code: Use the International Subscriber Dialling (ISD) code for the country where income originates.
Taxpayer Identification Number (TIN): Enter your TIN from the country where tax was paid. If unavailable, use your passport number.
DTAA Details: If claiming tax relief, mention the relevant article of the applicable Double Taxation Avoidance Agreement.
Form 67: Report foreign tax credit details in Form 67 to claim the credit in India.
How to Complete Schedule TR: Tax Relief Summary
Schedule TR consolidates tax relief claimed for taxes paid outside India, summarizing information from Schedule FSI.
Column-by-Column Guide
Columns (a) and (b): Enter the country code (ISD) and TIN (or passport number if TIN unavailable).
Column (c): Specify tax paid outside India on income declared in Schedule FSI.
Column (d): Enter the tax relief available, matching totals from Schedule FSI.
Column (e): Specify the provision under which you’re claiming relief (Section 90, 90A, or 91 of the Income-tax Act).
How to Complete Schedule FA: Foreign Assets Details
Who Must File
Indian residents must disclose all foreign assets or accounts where they are:
- Beneficial owners (provided consideration for the asset)
- Beneficiaries (derive benefit from the asset)
- Legal owners (hold title to the asset)
Exception: This requirement doesn’t apply if you’re classified as “not ordinarily resident” or “non-resident.”
Understanding the Tables
Schedule FA contains multiple tables (A1 through G) covering different types of foreign holdings for the calendar year ending December 31st:
Table A1: Foreign Depository Accounts
Report accounts held in foreign depositories, including:
- Peak balance during the year
- Closing balance
- Gross interest paid or credited
Table A2: Foreign Custodian Accounts
Disclose accounts with foreign custodians, showing:
- Peak and closing balances
- Gross amounts by type (interest, dividends, proceeds, other income)
Table A3: Foreign Equity and Debt Interest
Report investments in foreign equities and debt instruments:
- Initial, peak, and closing values
- Gross interest paid
- Total gross amounts credited
- Proceeds from sales or redemptions
Table A4: Foreign Insurance or Annuity Contracts
Include insurance or annuity contracts held abroad:
- Cash or surrender value at year-end
- Total gross amounts paid or credited
Table B: Financial Interest in Foreign Entities
Disclose holdings in foreign entities, including:
- Investment value at cost
- Nature and amount of income accrued
- Portion chargeable to tax in India
- Relevant ITR schedule where income was offered
Financial interest includes ownership as agent, nominee, attorney, or through corporations, partnerships, trusts, or other entities.
Table C: Immovable Property Outside India
Report foreign real estate holdings:
- Investment value at cost
- Nature and amount of income derived
- Portion chargeable to tax in India
Table D: Other Foreign Capital Assets
Disclose other capital assets abroad (excluding stock-in-trade and business assets):
- Investment value at cost
- Income details
- Taxable portion in India
Table E: Foreign Accounts with Signing Authority
Report foreign accounts where you have signing authority but aren’t the owner:
- Peak balance or total investment value
Table F: Foreign Trusts
Disclose trusts established outside India where you’re a trustee, beneficiary, or settlor:
- Income derived from such trusts
- Amount chargeable to tax in India
Table G: Other Foreign-Source Income
Report any other foreign-source income not covered in Tables A1 to F:
- Complete income details
- Amount chargeable to tax in India
Currency Conversion Guidelines
Exchange Rate Rules
Convert all foreign currency amounts to Indian Rupees using the telegraphic transfer buying rate on the relevant date:
- Date of peak balance for account balances
- Date of investment for investment values
- December 31st closing date for year-end values
Telegraphic Transfer Buying Rate
This is the exchange rate adopted by the State Bank of India for buying foreign currency, following Reserve Bank of India guidelines.
Calendar Year Reference
For Assessment Year 2025-26, report foreign assets and accounts held between January 1, 2024, and December 31, 2024.
Filing Revised Returns
If you missed reporting foreign assets or income in your original ITR, you can file a revised return to correct this omission.
Important Points
- Ensure you select an ITR form with Schedule FA (not ITR-1 or ITR-4)
- For Assessment Year 2025-26, file revised returns by December 31, 2025
- Voluntary disclosure through revised returns demonstrates good faith compliance
Dual Reporting Requirement
Even if you’ve reported foreign assets in Schedule FA, you must also report them in Schedule AL if applicable. This dual reporting ensures complete transparency and compliance with all disclosure requirements.
Action Steps for Taxpayers
Immediate Actions
- Review all your foreign assets and income sources
- Gather documentation for each foreign account and asset
- Collect TIN or passport numbers for foreign jurisdictions
- Obtain tax payment receipts from foreign countries
- Select the appropriate ITR form that includes Schedule FA (not ITR-1 or ITR-4)
During Filing
- Complete Schedule FA with details of all foreign assets
- Fill Schedule FSI for all foreign-source income
- Submit Form 67 for foreign tax credit claims
- Complete Schedule TR summarizing tax relief
- Ensure currency conversions use correct exchange rates
After Filing
- Maintain records of all foreign assets and income
- Track any changes in foreign holdings throughout the year
- Prepare for next year’s filing by organizing documents regularly
- Consider professional tax advice for complex situations
Common Mistakes to Avoid
Using Wrong ITR Form
Don’t file ITR-1 or ITR-4 if you have foreign assets. These forms lack Schedule FA, making proper disclosure impossible.
Incomplete Asset Disclosure
Report all foreign assets, even small accounts or dormant investments. The Income Tax Department receives comprehensive data from CRS and FATCA exchanges.
Incorrect Currency Conversion
Always use the State Bank of India’s telegraphic transfer buying rate on the appropriate date. Random exchange rates can lead to inaccuracies.
Missing DTAA Benefits
If you paid tax abroad, ensure you claim relief under the appropriate DTAA provisions to avoid double taxation.
Ignoring Beneficial Ownership
Even if you’re not the legal owner but are a beneficial owner or beneficiary of foreign assets, you must report them.
Conclusion
CRS and FATCA have transformed global tax compliance, making it essential for Indian residents with foreign assets to maintain complete transparency. By understanding these requirements and properly completing Schedules FA, FSI, and TR, you can:
- Avoid penalties and legal consequences
- Claim legitimate tax relief
- Maintain good standing with tax authorities
- Contribute positively to national development
Don’t wait for tax notices. If you haven’t reported foreign assets or income, consider filing a revised return before the deadline. Proactive compliance protects your interests while fulfilling your obligations as a responsible taxpayer.
All concerned must remember that Income Tax Department has access to detailed information about your foreign financial accounts through CRS and FATCA. Complete and accurate disclosure is not just a legal requirement; it’s your best protection against future complications.
For official guidelines/updated details, please refer Step-by-step Guide of Income Tax Deptt dated 20/11/2025 about Enhancing Tax Transparency on Foreign Assets and Income