Schedule FA in ITR 2026: Who Must Disclose Foreign Assets, and the ₹10 Lakh Penalty for Missing It

By Nitish Bharadwaj · Published Aug 15, 2026 · 6 min

Schedule FA requires every Resident and Ordinarily Resident taxpayer to disclose foreign bank accounts, RSUs, ESOPs, mutual funds, and overseas property held at any time during the calendar year — not the financial year — before the assessment year, with no minimum value threshold and only ITR-2 or ITR-3 eligible. Missing it attracts a flat ₹10 lakh penalty under the Black Money Act, though a 2025 relief now protects small, inadvertent misses under ₹20 lakh in foreign assets. This guide covers who must file, the calendar-year trap, and how to fill it in.

A single RSU vesting from a US-listed parent company, a foreign bank account left open after a work stint abroad, a small foreign mutual fund bought years ago — none of these have a minimum value below which Schedule FA stops applying. If you're a Resident and Ordinarily Resident, the disclosure is mandatory the moment you hold any foreign asset at any point in the relevant year, and the department doesn't care whether it was worth ₹500 or ₹5 crore.

Who Actually Has to File Schedule FA

This distinction trips people up because residential status for tax purposes and the popular understanding of 'NRI' don't always match. Someone who returned to India recently might still qualify as RNOR for a couple of years and be exempt from Schedule FA even while holding foreign assets — but once they cross into ROR status, the obligation kicks in regardless of how small those holdings are.

The Calendar-Year Trap Almost Everyone Misses

Every other part of your ITR runs on India's financial year — April 1 to March 31. Schedule FA doesn't. It asks for foreign assets held at any time during the calendar year ending December 31 that falls before the assessment year. For AY 2026-27, that means reporting foreign holdings between January 1, 2025 and December 31, 2025 — a window that starts three months before FY 2025-26 even begins and ends three months before it closes.

What Counts as a Foreign Asset — There's No Minimum Value

• Foreign bank accounts, including ones with a zero or near-zero balance
• Foreign equity holdings, RSUs, and ESOPs — including unvested awards from an employer's overseas parent
• Foreign mutual funds, ETFs, and other depository accounts
• Any signing authority over a foreign account, even one holding an employer's money rather than your own
• Immovable property held abroad
• Foreign retirement or pension accounts, such as a 401(k) left behind after working overseas

The RSU and ESOP category is where salaried employees at Indian subsidiaries of multinational companies most often get caught out — someone with an entirely domestic salary and no other foreign income can still owe a Schedule FA disclosure purely because their employer grants RSUs in a foreign-listed parent company. It's easy to assume this only applies to people who've lived or worked abroad; it doesn't.

Which ITR Form You Have to Use

Anyone required to file Schedule FA must use ITR-2 or ITR-3 — ITR-1 and ITR-4 don't support it at all. This holds even if your total income would otherwise have qualified you for the simpler ITR-1, and even if your income sits below the basic exemption limit. Holding a foreign asset, on its own, forces the more detailed form.

The Penalty for Not Disclosing

Failing to disclose, or inaccurately disclosing, a foreign asset attracts a flat ₹10 lakh penalty under Sections 42 and 43 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 — a penalty that applies per year and regardless of whether the asset generated any taxable income at all. Where undisclosed foreign income is also involved, the exposure is worse: tax at 30% on that income plus a further penalty of three times the tax, pushing total exposure toward 120% of the income, alongside possible prosecution.

A 2025 amendment eased this for genuinely small, inadvertent misses. The threshold below which this penalty isn't levied was raised from ₹5 lakh to ₹20 lakh, and widened to cover all foreign assets other than immovable property — a change aimed at cases where the penalty was clearly disproportionate to the value involved, like a forgotten account with a few thousand rupees in it. A CBDT instruction dated August 18, 2025 also directs that prosecution won't be initiated where this penalty relief applies.

How to Actually Fill It In

1. Choose ITR-2 or ITR-3 based on your income sources — Schedule FA isn't available on ITR-1 or ITR-4.
2. Gather details for each foreign asset held between January 1 and December 31 of the calendar year before the assessment year: acquisition date, peak balance or value during the year, closing balance, and any income earned from it.
3. Fill in the relevant Schedule FA table for each asset type — foreign bank accounts, equity and RSUs/ESOPs, foreign mutual funds, immovable property, and signing authority each have their own section.
4. Cross-check any foreign income reported in Schedule FA against what you've also reported in Schedule FSI and claimed relief for in Schedule TR, so the three schedules stay consistent.
5. File using ITR-2 or ITR-3 before the due date — Schedule FA compliance doesn't get any extra time even if the rest of your return is straightforward.

If you're filing ITR-2 or ITR-3 for the first time because of a foreign asset, our complete ITR filing guide for AY 2026-27 is a useful starting point for the rest of the return. Foreign remittances under the Liberalised Remittance Scheme come with their own separate compliance layer — our TCS on foreign remittance guide covers that. And since foreign income and TDS credits can show up in your annual information statement, our Form 26AS vs AIS guide is worth checking before you finalise the numbers on Schedule FA.