The Income Tax Department has launched the Annual Information Statement (AIS) portal, allowing taxpayers to access their foreign asset and income information directly through the e-filing portal. Currently, the AIS displays foreign asset and income details for calendar years 2022-2024, with 2025 data expected to be added by September or October 2026 once received from partner nations. This facility has been introduced as part of the Foreign Assets of Small Taxpayers Disclosure Scheme (FAST-DS), 2026, enabling taxpayers to access year-wise foreign financial information beginning from calendar year 2022. The information is accessible only to the account holder and protected by a secured password, with the portal guiding taxpayers on how to unlock the document. The Indian government receives financial account information relating to resident taxpayers from several foreign jurisdictions under international information exchange agreements, making this data now available for taxpayer review for the first time.
According to tax experts, the choice of ITR form depends on the nature of taxpayer income rather than whether mutual funds invest domestically or overseas. International mutual funds offered by Indian AMCs are treated as domestic mutual fund investments for tax purposes, even if they invest in overseas securities, and therefore do not need Schedule FA disclosure. However, capital gains from their sale or redemption must be disclosed in the Capital Gains Schedule. Investors cannot use ITR-1 for international mutual fund redemptions and should generally file ITR-2, or ITR-3 if they have business or professional income. LRS investors must make additional disclosures including foreign assets (Schedule FA), foreign income (Schedule FSI) and foreign tax credit claims (Schedule TR). Taxpayers with foreign assets cannot file ITR-1; they should use ITR-2 if they have no business income, as ITR-1 does not support foreign asset disclosures. The Income Tax Return (ITR) filing due date for salaried individuals is July 31, 2026 if they are not liable for tax audit, giving taxpayers time to update their disclosures and correct any discrepancies between reported income and actual assets.
As reported by tax experts, international equity fund-of-funds (FoFs), feeder funds, overseas ETF FoFs and international debt schemes offered by Indian AMCs are generally not classified as equity-oriented mutual funds under the Income-tax Act since these schemes invest less than 65% of their assets in domestic equities. Instead, most are treated as Specified Mutual Funds under Section 50AA of the Income Tax Act. According to Shubham Jain, director, SVAS Business Advisors LLP, gains on units held for up to 24 months are taxed as short-term capital gains at the investor's applicable slab rate, while gains on units held for more than 24 months are taxed as long-term capital gains at 12.5% (plus surcharge and cess), without indexation benefits. Income from foreign sources such as foreign salary, interest, dividends, capital gains, and professional income must be declared under Schedule FSI, covering all foreign-earned income. Foreign ESOPs and RSUs also require disclosure in Schedule FA, with details of foreign assets reported in Schedule FA and potentially Schedule AL. Foreign dividends, fund distributions and interest earned on overseas brokerage balances are taxable in India under the head 'Income from Other Sources' as resident taxpayers are taxed on their global income.
According to Akhil Chandna, partner and global people solutions leader at Grant Thornton Bharat, Schedule FA applies to Resident and Ordinarily Resident (ROR) taxpayers who hold reportable foreign assets, including foreign brokerage accounts, overseas shares, mutual funds, ETFs and reportable overseas cash balances. The schedule follows the calendar year (ending December 31) unlike the rest of the ITR, which follows the financial year. Foreign currency values should be converted into rupees using the State Bank of India's Telegraphic Transfer Buying Rate (TTBR) under Rule 115, and exchange-rate records should be retained. Failure to disclose foreign assets with an aggregate value exceeding ₹20 lakh may attract a penalty of ₹10 lakh under the Black Money Act. If foreign assets were not disclosed in previous years, taxpayers can file an updated return using ITR-U (Updated Return) for the relevant assessment years to correct past omissions without immediate penalties. Gifts from specified relatives are fully exempt from income tax, while non-relative gifts exceeding certain values become taxable under specific rules, with taxable gifts must be reported under income from other sources.
To access foreign asset information through the AIS portal, taxpayers can follow five simple steps: log in to their income tax e-filing account, navigate to the AIS section under the reports tab, select 'Foreign Assets Information,' choose the relevant calendar year (2022, 2023, or 2024), and download the PDF containing foreign asset and income details. The downloaded PDF requires PAN entry in lowercase letters followed by date of birth in DDMMYYYY format to access the report. In case the AIS doesn't reflect updated foreign asset data, resident taxpayers are still required to accurately disclose their overseas investments under Schedule FA and foreign income under Schedule FSI while filing their income tax returns (ITRs). Relying solely on the AIS is not sufficient, as taxpayers remain responsible for reporting all foreign assets and income correctly. SMS and email alerts are being sent to taxpayers reminding them to report foreign assets correctly while filing returns for Assessment Year 2026-27, with the Central Board of Direct Taxes promoting 'Kar Saathi,' an AI-based assistant on the e-Filing portal to help taxpayers choose the right return form and navigate foreign asset reporting. The Central Board of Direct Taxes is also promoting 'Kar Saathi,' an AI-based assistant on the e-Filing portal to help taxpayers choose the right return form and navigate foreign asset reporting.
According to Aarti Raote, partner at Deloitte India, foreign dividends, fund distributions and interest earned on overseas brokerage balances are taxable in India under the head 'Income from Other Sources' as resident taxpayers are taxed on their global income. Taxpayers can claim credit for taxes paid overseas by furnishing supporting documents such as tax withholding statements, tax deduction certificates or foreign tax returns. Capital losses from foreign shares, mutual funds and ETFs should be reported in the Capital Gains Schedule, with short-term losses set off against both short-term and long-term gains, and long-term losses adjusted only against long-term gains. Unabsorbed losses can be carried forward for up to eight assessment years if the return is filed within the due date. The inclusion of foreign asset data in the AIS signals a stronger focus by the Income Tax Department on overseas holdings, helping identify discrepancies between reported income and actual assets, reducing tax evasion risks.
