Undisclosed Foreign Asset? Here is How to Report Foreign Income and Assets in your Tax Return
The taxpayers are being reminded to report any foreign income or assets that they have not disclosed. In an effort to encourage taxpayers to voluntarily report their foreign assets and income, the Central Board of Direct Taxes (CBDT) implemented the second phase of its NUDGE (Non-intrusive Usage of Data to Guide and Enable) campaign from November 28, 2025. Under this second phase, the taxpayers are required to revise their Income Tax Returns (ITR) before December 31, 2025.
The first NUDGE campaign was launched on November 17, 2024 and targeted the taxpayers identified through the information shared by foreign jurisdictions under the Automatic Exchange of Information (AEOI) framework. Under the first NUDGE initiative, taxpayers disclosed foreign assets of Rs 29,208 crore and the foreign income of Rs 1,089.88 crore.
Why is Reporting Important?
If you think that you can hide the details about your foreign income and foreign assets without getting identified by the Income Tax Department, then you are wrong. The CBDT gets information about the foreign assets of Indian residents by using the Common Reporting Standards (CRS) and the Foreign Account Tax Compliance Act (FATCA). CRS and FATCA prevent tax evasion by ensuring transparency.
Therefore, there is no way you can escape the eyes of the Income Tax Department.
How to Report Foreign Income?
Taxpayers are required to report the foreign income using the specific schedules in their Return:
- Schedule FA: Your Foreign Assets or Income-related information must be submitted in Schedule FA (Foreign Income).
- Schedule TR: The summary of tax relief claimed in India against the taxes paid outside India must be submitted in the Schedule TR (Tax Relief). Taxpayers must file this with Form 67. This form is used to claim Foreign Tax Credit (FTC) for the taxes paid on income earned in a foreign country, preventing double taxation.
- Schedule FSI: All the details regarding the income accruing or arising from any source outside India must be reported in Schedule FSI (Foreign Source Income).
Consequences of Non-Reporting
If taxpayers do not declare their foreign income and assets, they might get into legal trouble. Non-reporting can attract penalties and even prosecution under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.
