What is foreign income of a resident taxpayer?

If you are Resident in India and have been abroad, it’s likely all the noise about foreign income is causing you a lot of confusion.

Let’s understand today what foreign income is.

  • Did you work outside India for some period of time and opened a bank account at such place? (Bank account)
  • Hold stocks or stock options, ESOPs, ownership rights, shares, or debentures (by whatever name called) or have investments in a mutual fund, pension fund or even a financial interest in an intellectual property right? (Financial interests or rights)
  • Possibly own a property outside India? (Assets)
  • Have income from foreign royalties, or earn rent from a property owned outside India, earned capital gains from assets outside India? (Income sources)

 

If any of the above is true for you – you’ll have to fill schedule FA in your tax return and do the relevant disclosures. Schedule FA has been overhauled and a lot more disclosure has been added.

 

Now let’s look at the following situations –

  • Raghav is resident in India and is a freelancer and has earned some google adsense income which was transferred directly to his savings bank account. Raghav is not sure if this is foreign income and whether he should fill Schedule FA.
  • Rashmi is a professor in Delhi University and she was paid for delivering a lecture in a university in Atlanta. Rashmi wants to know if this is considered as foreign income.
  • Abhay worked in the US for a few months and earned some salary and later returned to India and is now a resident. Is Abhay’s income considered ‘foreign income’?

Schedule FA is not required to be filed in any of the cases listed above.

 

Here is a snapshot of Schedule FA.

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Don’t let it get the better of you – reach out to us and our CA experts will fill the schedule for you!

Are you unsure about whether Schedule FA applies to you? write to us we’ll help you support@cleartax.in

 

 

4 Responses to What is foreign income of a resident taxpayer?

  1. HG August 9, 2015 at 10:30 am #

    I am a US citizen and moved to India over 10 years ago. I have mutual fund investments, IRA (retirement accounts) and bank account in US. Do I need to (a) declare these in my India return and (b) declare any income/dividends earned on this money on my India return.

    Thanks

    • cleartax-team August 9, 2015 at 11:42 am #

      Yes sir, you must disclose these assets and income earned from them in your tax return. Please reach out to us support@cleartax.in and our experts will assist you.

      • Ritu August 12, 2015 at 11:46 pm #

        Similar situation- if I report such legitimate accounts formed while non resident in the FA and simultaneously pay taxes on global income earnt, do I need to file Ch 6 for previous financial years where I did not pay taxes on dividends / gains from these foreign accounts. Or Will that be covered under normal income tax laws?

        • cleartax-team August 13, 2015 at 11:26 am #

          Hi Ritu, a lot depends on your residential status in those years. And also whether you have already paid tax on these incomes outside India. Please drop us an email support@cleartax.in and our experts will assist you.