How Foreign Stocks Are Declared in Indian Income Tax Returns (ITR)
As Indian investors increasingly diversify their portfolios by investing in global markets, it’s essential to understand how to correctly declare foreign stocks in your Income Tax Returns (ITR). If you’re a resident Indian holding foreign equity shares, the Income Tax Department mandates detailed reporting of these assets — even if they don’t generate income during the year.
In this guide, we’ll walk you through how foreign investments, especially stocks, are declared in your ITR, along with practical examples, tips, and compliance guidelines
What Are Foreign Assets?
Foreign assets include:
Foreign equity shares (e.g., stocks of Apple, Tesla, Amazon)
Foreign mutual funds or ETFs
Foreign bank accounts
Real estate abroad
Foreign demat or custodial accounts
These are reportable under Schedule FA if you’re a Resident and Ordinarily Resident (ROR) in India during the financial year.
What is Schedule FA?
Schedule FA (Foreign Assets) is a dedicated section in the ITR that requires details of:
Foreign bank accounts
Foreign custodial accounts (like Zerodha International, Interactive Brokers)
Foreign equity or debt interest
Any other foreign income-generating asset
You need to disclose:
Date of acquisition
Initial and closing value of the investment
Income received (dividend, interest)
Sale proceeds (if sold)
Even if the asset did not yield any income, it must still be reported if it was held at any time during the financial year.
Who Needs to File Schedule FA?
Only individuals qualifying as Resident and Ordinarily Resident (ROR) must disclose foreign assets.
How to determine your residency status:
You’re an ROR if you:
Stay in India for 182 days or more in a year AND
Have been a resident in 2 out of the last 10 years, and
Stayed for 730 days or more in the last 7 years
If you’re an NRI or Resident but Not Ordinarily Resident (RNOR), you don’t need to file Schedule FA
Where & How to Declare Foreign Stocks in ITR
1. Schedule FA – Foreign Equity Holding
Disclose:
Name of the company
Country of incorporation
Date of acquisition
Purchase value
Closing value (as of 31st December)
Dividends received (in local currency and INR)
2. Capital Gains Schedule (CG)
If you sold any foreign stocks:
Report under “Capital Gains” section
Provide sale value, cost of acquisition, and date of sale
Calculate gains as short-term or long-term depending on holding period
Foreign stocks are long-term if held for more than 24 months.
3. Income from Other Sources (IFOS)
Declare dividends received from foreign companies here.
Practical Example – Ashwin’s Case
Let’s say Ashwin, a resident Indian, made the following investments in 2022:
| Stock | Invested | Sale Proceeds | Current Value | Dividends Received |
|---|---|---|---|---|
| X | ₹5,000 | Not Sold | ₹5,400 | ₹150 |
| Y | ₹3,000 | ₹3,100 | Not held | NIL |
| Z | ₹2,000 | Not Sold | ₹2,500 | NIL |
Declaring Foreign Custodial Accounts
In Ashwin’s ITR:
He’ll report Stock X in Schedule FA and declare ₹150 dividend under IFOS.
Stock Y’s sale is reported under Capital Gains and also declared in Schedule FA.
Stock Z is only reported in Schedule FA.
If your stocks are held in a foreign broker/demat account, such as:
Interactive Brokers
Charles Schwab
TD Ameritrade
Then declare this account under “Foreign Custodial Accounts” in Schedule FA.
You’ll need:
Account number
Peak balance during the year
Closing balance (as on 31st Dec)
Total income credited (dividends, sales, etc.)
Foreign Tax Credit (FTC) – Claim Tax Relief on Dividends
Many foreign countries (e.g., USA) deduct tax at source on dividends. In such cases, you can claim foreign tax credit (FTC) in India by:
Steps to Claim FTC:
File Form 67 online before filing your ITR
Submit details of tax deducted abroad and attach proof (broker statement)
In ITR, claim relief under Section 90/91
Example:
Dividend received from USA: ₹8,19,500
Tax withheld in USA @25% = ₹2,04,875
You can claim this amount as FTC, reducing your total tax liability in India.
Note: FTC allowed is the lower of:
Tax paid in foreign country
Tax payable in India on that income
Compliance Rules, Timelines & Penalties
| Requirement | Description |
|---|---|
| Filing Deadline | 31st July (for individuals not requiring audit) |
| Form to use | ITR-2 (for capital gains & foreign assets) |
| Form 67 | Must be submitted before ITR to claim FTC |
| Penalty for non-disclosure | ₹10 lakhs under Black Money Act for undisclosed foreign assets |
FAQs
Q1. Do I need to report foreign stocks if I didn’t sell them?
Ans. Yes, all foreign assets must be declared in Schedule FA even if no income or sale occurred.
Q2. Can I skip Form 67 if no tax was deducted abroad?
Ans. Yes, Form 67 is only required if you claim foreign tax credit.
Q3. What if I forget to declare a foreign asset?
Ans. It could lead to penalties up to ₹10 lakhs under the Black Money Act.
