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Foreign income, foreign assets, and the schedules that follow

Equity from a foreign employer, an overseas brokerage account or a year spent working abroad turns an ordinary return into three or four interlocking schedules. This is the work we do most.

Step one, always

Residential status decides everything else

Scope of income, the applicability of Schedule FA and the availability of treaty relief all follow from status. It is determined afresh for each financial year on a day count, not on intention or on visa category.

Status	Test in outline	Scope of income taxable in India	Schedule FA
Resident and ordinarily resident	Meets a basic condition in section 6(1) and both additional conditions in section 6(6)	Global income	Applicable
Resident but not ordinarily resident	Resident under section 6(1) but fails an additional condition in section 6(6)	Indian income, plus foreign income from a business controlled from or a profession set up in India	Not applicable
Non-resident	Does not meet any basic condition in section 6(1)	Income received, accruing or deemed to accrue in India	Not applicable

Watch the special cases. The 60-day basic condition is extended to 182 days for an Indian citizen leaving India for employment abroad or as a crew member, and to 120 days for an Indian citizen or person of Indian origin visiting India whose Indian-source income exceeds ₹15 lakh. Section 6(1A) deems an Indian citizen with Indian income above ₹15 lakh to be resident where he is not liable to tax in any other country by reason of domicile or residence. Day counts should be built from passport stamps, not from memory.

Equity compensation

RSUs, ESOPs and ESPPs, event by event

Event	Tax treatment	Value taken	Currency conversion
Grant	No tax event	—	—
Vesting / exercise	Perquisite taxable as salary under section 17(2)(vi); employer withholds under section 192	Fair market value on the date of exercise or vesting, less amount paid by the employee	Rule 26 — SBI TT buying rate on the date tax is required to be deducted
Holding	No tax event, but the holding is a reportable foreign asset for a resident and ordinarily resident	Peak and closing value during the accounting period	Rate on the relevant valuation dates, documented
Dividend	Income from other sources, taxable at slab rates on the gross amount	Gross dividend before foreign withholding tax	Rule 115 — specified date for that head of income
Sale	Capital gain; period of holding measured from the date of allotment on vesting	Sale consideration less the FMV already taxed as perquisite, less transfer expenses	Rule 115 — last day of the month preceding the month of transfer

The most common error. Taking the sale proceeds as the entire gain, because the perquisite already taxed on vesting was not carried forward as cost of acquisition. The same income is then taxed twice — once as salary and once as capital gain — and the excess is rarely noticed because Form 16 and the broker statement are read separately.

The second most common error. Assuming shares of a foreign listed company attract the concessional rates that apply to listed Indian equity. Those provisions require listing on a recognised stock exchange in India and payment of securities transaction tax; foreign shares fall outside them, and the classification and rate follow the general provisions instead.

Disclosure & relief

The three schedules that travel together

Schedule FA

Foreign assets held at any time during the relevant accounting period by a resident and ordinarily resident — disclosure, not taxation. Reported whether or not any income arose.

Depository and custodial accounts, with peak and closing balances
Equity and debt interests, with initial investment value and proceeds
Immovable property and other capital assets outside India
Signing authority, trusts and other foreign interests

Why it matters: omission is dealt with under the Black Money Act, 2015, not the Income-tax Act.

Schedule FSI

Income from outside India, reported source by source and country by country, on a gross basis before foreign withholding tax.

Country and taxpayer identification number
Head of income and the amount, in rupees
Tax paid outside India on that income
The treaty article relied on

Schedule TR & Form 67

Relief claimed under sections 90, 90A or 91, computed source by source and restricted to the lower of the Indian tax on that income and the foreign tax paid.

Form 67 filed under Rule 128(9), before the return
Proof of payment or deduction of foreign tax
Certificate from the foreign tax authority, employer or deductor
Treaty rate applied where lower than domestic rate

Questions

Foreign income, answered

I am an NRI. Do I need to file an Indian return at all?

A non-resident is taxable in India on income received or deemed to be received in India, and on income accruing or arising or deemed to accrue or arise in India. If that income exceeds the basic exemption limit, or if you wish to claim a refund of tax deducted at source, or if you want to carry forward a loss, a return is required or advisable. Note also that Schedule FA does not apply to a non-resident or to a resident but not ordinarily resident — it applies to a resident and ordinarily resident.

How is an RSU taxed in India?

There are two taxable events. On vesting, the fair market value of the shares less anything you paid is a perquisite taxable as salary under section 17(2), and your employer is required to withhold tax on it. On a later sale, the difference between the sale consideration and that same fair market value is a capital gain. The period of holding for classifying that gain runs from the date of allotment on vesting, not from the grant date. Shares of a foreign company are not listed on a recognised stock exchange in India, so the concessional rates for listed Indian equity do not apply to them.

Which exchange rate do I use, and on which date?

For the salary perquisite on vesting, Rule 26 applies the telegraphic transfer buying rate adopted by the State Bank of India on the date on which tax is required to be deducted. For capital gains and other income, Rule 115 applies the TT buying rate on the specified date, which for capital gains is the last day of the month immediately preceding the month in which the transfer took place. We record the rate, date and source for every conversion in the working paper, so the basis is visible rather than assumed.

What is the deadline for Form 67?

Rule 128(9) requires Form 67 to be furnished on or before the end of the assessment year relevant to the previous year in which the income is offered to tax, and it may also be filed along with an updated return. Filing Form 67 late has been a common cause of foreign tax credit being denied at processing, so the form should be filed before the return, not after it.

What has to go into Schedule FA?

For a resident and ordinarily resident: foreign depository accounts, foreign custodial accounts, foreign equity and debt interests, foreign cash value insurance or annuity contracts, financial interest in any foreign entity, immovable property outside India, other capital assets outside India, accounts where you are a signing authority, trusts outside India in which you are a settlor, beneficiary or trustee, and any other income arising outside India. The reporting is for the relevant accounting period, which for most jurisdictions on a calendar-year basis means the calendar year ending within the financial year.

Client experience

In their words

Reviews from clients of the practice, published as given and with consent. First names only. Grammar has been tidied where needed; nothing has been added, removed or reworded in substance.

Foreign assets & notice

I had issues with my ITR filing and also received a notice regarding foreign assets declaration, which was quite stressful. I approached Mr. Mahendra, and he handled everything very professionally and efficiently. He carefully reviewed my already filed ITR, rectified the mistakes, and guided me step by step in correctly declaring the foreign assets. He is very knowledgeable, responsive and clear in his explanations, which gave me a lot of confidence and peace of mind throughout the process. Highly recommend him to anyone looking for reliable support for ITR filing, rectifications, or handling income tax notices.

Jyoti

ITR filing

Best experience in filing ITR so far. He takes full ownership end to end in filing ITR. He does all things in the legal way and no fake proofs are entertained, in order to be compliant with income tax law. I strongly recommend the services of Prisha Tax Consulting.

Ritesh

Year on year filing

For a few years now, Prisha Tax Consulting has been helping me file my Income Tax Return. After I gave them my details, goals and plans just once, they have consistently reminded me to file without ever needing that information again. The process is so smooth that all I have to do is give them the go-ahead.

Dr. Swathi

Filing & refund

Mahendra Sir was extremely helpful in guiding me through the process of filing my Income Tax Return. He explained everything clearly and ensured that the filing was done in a genuine and accurate manner. Thanks to his guidance, I received my tax refund within an unexpectedly short time. Overall, it was a great and smooth experience. Highly recommended!

Shashidhara

Filing & advisory

After consulting with Mahendra for my income tax filing, I can confidently say that he is a knowledgeable and reliable person for this job. He has been very professional and timely with his services. He helped me understand the process better. He is also up to date with all the latest laws and rules regarding tax filing. Highly recommend him.

Satya

First consultation

I came to know about Mr. Mahendra Sir through my neighbour. In my first meeting itself I had seen his deep expertise associated with taxes. He educated me with all my queries and had solved my problems. He is a very professional and trustworthy person.

Baskar

Tax notice resolved

Mahendra from Prisha Tax Consulting was extremely helpful in resolving my pending tax issue, which had been pending for some time. He worked on a proper response and helped me submit it at the Income Tax office, which got cleared. Thanks Mahendra!

Ganesh

Four-year client

I have had a great experience with Mahendra from Prisha Tax Consulting for the last four years. He charges minimal fees for filing the returns and guides very well on tax saving options. He is very knowledgeable, approachable and a very professional financial advisor. I look forward to engaging with him for all my future requirements.

Sachin

Transparency

Thank you, Mahendra, for assisting us in filing our ITR. I especially appreciated the transparency throughout the entire process and the detailed information shared with us. This not only helped us understand our taxation better but also provided valuable advisory insights. Your expertise and clear communication made a complex process much simpler for us.

Manik

Tax saving advice

My experience with Mahendra from Prisha Tax Consulting has been extremely satisfying. He is very knowledgeable and does not just file the ITR with the information provided to him, but also guided me on the various sections under which I can invest for tax benefits.

Rahul

Ongoing compliance

Timely submission, careful calculations and regular follow-ups — these attributes make Prisha Tax Consulting one of the more reliable firms.

Avinash

Multi-year client

Have been getting my ITR filed by Prisha Tax Consulting for the last few years. Very reliable service. Mr. Mahendra gave really good advice related to tax saving.

Debjoy

Start a conversation

Tell us the facts. We will tell you the position.

Send your Form 16, broker statements, vesting reports and Form 26AS / AIS. You will get a written scoping note setting out the schedules involved, the documents required and a fixed fee before any work begins.

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