What is Schedule FA? Why is it important for remote workers
TL;DR
- Filing Schedule FA is required if you are Resident and Ordinarily Resident and hold any foreign asset. It sits in ITR-2 and ITR-3. It is about declaring foreign assets, not tax.
- Reporting follows the calendar year (Jan-Dec), not the financial year. For AY 2025-26, report assets held between 1 Jan 2024 and 31 Dec 2024.
- Must report foreign bank or Wise/Payoneer balances , vested RSUs/ESPP shares, foreign brokerage accounts and signing authority in foreign accounts.
- Valuation must use SBI TT Buying Rate. Use the rate on peak date for peak balance, 31 December for closing balance, and vesting/purchase date for cost.
- Non-disclosure risks ₹10 lakh penalty per year under the Black Money Act. Relief exists for movable assets below ₹20 lakh (from 1 Oct 2024). A proposed 2026 scheme allows correction of past omissions with a ₹1 lakh fee and immunity, subject to conditions.
Detailed Version:
You file your ITR every year and think that is enough.
It is not always enough.
There is one part in the Income Tax Return that remote workers and full time contractors don't even notice. That part is called Schedule FA.
FA means Foreign Assets.
What is Schedule FA?
Schedule FA is a specific section in the ITR-2 and ITR-3 forms. It requires you to list every asset you own outside India.
This applies to you if you are a Resident and Ordinarily Resident (ROR). Remote workers living in India fall into this category.
You must report these assets even if you do not have taxable income. You must report them even if you paid tax on them in the US or UK. The filing is about disclosure, not tax.
The \"Calendar Year\" Rule
This is where most people make mistakes.
India follows a Financial Year (April 1 to March 31).
Schedule FA follows the Calendar Year (January 1 to December 31).
For the Assessment Year 2025-26 (the return you file in July 2025), you must report assets held between January 1, 2024, and December 31, 2024.
If you bought US stocks in February 2024, you must report them now. If you bought them in February 2025, you do not report them this year. You will report them next year.
You need to report these assets:
For an IT professional, three types of assets are common.
[1. Foreign Bank Accounts (Table A1)]{.underline}
- This includes traditional bank accounts (like Wells Fargo or Chase) and digital wallets that hold a balance.
- Wise and Payoneer: If you hold money in a USD or EUR balance, it counts as a foreign depository account.
- Zero Balance: You must report the account even if the balance is zero at the end of the year. If the account existed for one day, you must report it.
[2. Foreign Shares and RSUs (Table A3)]{.underline}
- Vested RSUs: Once RSUs vest, they become shares. You own them. You must report them in Table A3.
- Unvested RSUs: You do not own these yet. You do not need to report unvested units.
- ESPP: Shares bought through an Employee Stock Purchase Plan are foreign assets. You must report them.
How to Value Your Assets
You cannot use Google for exchange rates. You must use the State Bank of India (SBI) Telegraphic Transfer (TT) Buying Rate.
- For Peak Balance: Use the SBI TT Buying rate on the date the account had the highest balance.
- For Closing Balance: Use the SBI TT Buying rate for December 31.
- For Investment Cost: Use the SBI TT Buying rate for the date of vesting or purchase.
The Penalties
The Income Tax Department gets data from foreign countries. They know about your US brokerage account. They know about your foreign interest income. This happens through the Automatic Exchange of Information (AEOI).
If your ITR does not match their data, the consequences are severe.
[1. The Black Money Act Penalty]{.underline}
The penalty for non-disclosure is ₹10,00,000 (10 Lakhs) per year. This applies for every year you failed to report the asset.
[2. Prosecution]{.underline}
The law permits jail time for willful attempt to evade tax. It is a criminal offense, not just a civil dispute.
New Relief Measures (Somewhat good News)
The government realized these rules were too harsh for small taxpayers. They introduced two major changes in the 2026 budget cycle.
[1. The ₹20 Lakh Threshold]{.underline}
Effective October 1, 2024, the ₹10 Lakh penalty does not apply if the value of your foreign assets is less than ₹20 Lakhs. This protects you if you have small RSU holdings or a minor balance in a Wise account.
[2. The 2026 Disclosure Scheme]{.underline}
This scheme is in the Finance Bill 2026. It is not law yet.
If you missed reporting foreign assets in earlier years, this scheme gives you a legal way to correct it.
Under the Foreign Assets of Small Taxpayers Disclosure Scheme (aka Fast-DS scheme), 2026 :
- You disclose the foreign asset that was missed in past returns.
- You explain the source of investment.
- If the source is explained, the scheme charges a flat fee of ₹1,00,000, subject to the scheme limits and conditions.
Once you file the disclosure under the scheme and pay the fee, you get immunity under the scheme from:
- prosecution and
- penalties under the Black Money Act for that disclosed asset and related income.
This disclosure scheme is available to taxpayers with undisclosed assets of less than Rs. 5 crores. It is to be noted that this scheme is only available to you if you just forgot to report the assets in Schedule FA. It is not available to you for unreported Income