Why you must declare your foreign shares and RSUs during tax filing?
This article gives you an overview of the tax-related tasks and calculations needed for resident Indians who hold foreign shares.
This article gives you an overview of the tax-related tasks and calculations needed for resident Indians who hold foreign shares.
You should be reading this article if you hold any foreign shares, ETFs, or mutual funds listed on a foreign stock exchange:
Note: The Schedule FA declaration rule applies to unlisted shares (e.g. Employee Stock Ownership Plan or ESOP) of foreign companies as well.
As per the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, not declaring foreign assets can lead to a ₹10 lakh penalty per year if you do not declare foreign assets like shares in your ITR via Schedule FA (Foreign Assets).
Here is a key distinction with tax-filing of normal capital gains tax:
You cannot, as a side effect, take advantage of any Double Taxation Avoidance Agreement (DTAA) provisions to offset taxes paid in the foreign country if you do not fill Schedule FA.
Note: Union Budget 2024, delivered on 23-Jul-2024, proposes no penalties for forgetting to declare foreign assets up to ₹20 lakh. It is still a good idea to fill Schedule FA.
Even if you hold these stocks for a day, say you receive a grant that can be sold immediately, you need to still fill Schedule FA in the next tax-filing. Of course, you will fill ITR2 (or equivalent) form for the share sale.
There is no way to miss filling Schedule FA since you can open a foreign brokerage account once you provide your PAN number. There is a bit of leeway that not necessarily Schedule FA, which is a bit cumbersome, has to be filled as long as you declare these assets in some form or the other in the ITR.
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This post titled Why you must declare your foreign shares and RSUs during tax filing? first appeared on 10 Mar 2024 at https://arthgyaan.com