Resident taxpayers with foreign bank accounts, overseas shares, employee stock options (ESOPs) or other foreign assets must disclose them while filing their income tax returns (ITRs) for Assessment Year 2026-27. However, simply reporting these assets is not sufficient - taxpayers must convert their value into Indian rupees using the Telegraphic Transfer Buying Rate (TTBR) of the State Bank of India (SBI) on the relevant date. According to Chandni Anandan, chartered accountant and tax expert at ClearTax, using Google, RBI reference rates, or exchange rates quoted by banks can lead to incorrect disclosures and invite unnecessary scrutiny. Taxpayers often incorrectly use publicly available exchange rates or apply one exchange rate across all foreign assets without checking the reporting rules applicable to each category. As Ashwini Kumar, advocate and founder of My Legal Expert, noted, taxpayers often treat Schedule FA as a routine disclosure, overlooking the technical requirements relating to valuation, documentation and exchange rate conversion.
The relevant date for currency conversion depends on the figure being reported rather than the type of asset. As explained by Anandan, the acquisition value of a foreign investment should be converted using the SBI TTBR on the date of acquisition, while the peak value should be converted using the TTBR applicable on the date when the investment reached its highest value. The closing value should be converted using the TTBR on December 31, 2025, the last day of the reporting calendar year for AY 2026-27. Parag Jain, chartered accountant and tax head at 1 Finance, noted that Schedule FA follows the calendar year (January 1 to December 31) and not India's financial year. For AY 2026-27, taxpayers must report foreign assets held at any point between January 1, 2025 and December 31, 2025, with many mistakenly reporting only assets held as of March 31, 2026. Jain illustrated this with foreign shares acquired during the year, explaining that the acquisition value, peak value and year-end value may all require different exchange rates because they relate to different dates.
Experts provided practical examples of proper exchange rate application. Jain explained that for employee restricted stock units (RSUs) vesting on July 15, 2025, the initial value reported in Schedule FA should be calculated using the SBI TTBR applicable on the vesting date, though the employer may have used a different exchange rate for salary income under separate tax provisions. Similarly, Anandan advised that a resident holding US-listed shares should use separate TTBR rates for acquisition value, peak value and closing value instead of converting the entire holding using one convenient exchange rate. Taxpayers should maintain acquisition documents, brokerage statements, foreign bank statements and evidence of the SBI TTBR used for every disclosure, as recommended by Ashwini Kumar. For returning residents and employees holding shares in overseas companies, maintaining proper records significantly reduces reporting errors. Taxpayers should download the SBI TTBR applicable on each relevant date and preserve those records along with the filed return.
Using an incorrect exchange rate may not automatically result in a penalty if the difference is minor, but it can still make the return technically inaccurate. According to Anandan, if the incorrect rate leads to a material misstatement, the Income Tax Department may seek clarification. Where taxpayers identify such errors themselves, filing a revised return within the permitted time is the safest approach. Larger valuation differences, particularly for sizable overseas portfolios, could become significant during scrutiny. Mihir Tanna, associate director at S.K. Patodia LLP, warned that foreign asset disclosures are increasingly being verified through the Automatic Exchange of Information (AEOI) framework under CRS and FATCA, with mismatches potentially triggering compliance notices or scrutiny. He also cautioned that taxpayers should disclose even dormant foreign bank accounts or accounts with small balances if they are reportable under Schedule FA.
Experts advise taxpayers to organize their records before starting the ITR. According to Anandan, taxpayers should reconcile their disclosures with the Annual Information Statement (AIS), which now includes foreign asset and income information received under international information-sharing arrangements. Jain advised taxpayers to first determine their residential status, as Schedule FA generally applies only to Resident and Ordinarily Resident (ROR) individuals and not to NRIs or Resident but Not Ordinarily Resident (RNOR) taxpayers. Taxpayers who have paid tax overseas should ensure they complete prescribed compliance requirements for claiming foreign tax relief, wherever applicable. With overseas investments becoming increasingly common among Indian professionals, experts emphasize that accurate reporting is no longer just a disclosure requirement. Using the prescribed SBI TTBR, maintaining supporting documents and reporting foreign assets for the correct calendar-year period can help taxpayers avoid unnecessary notices and ensure their returns remain compliant.
