Schedule FA Black Money Act Disclosure: Foreign Asset Reporting for Residents and Returnees

Every Indian tax resident who holds a bank account, brokerage account, retirement plan, property or other asset outside India has a disclosure duty that has nothing to do with whether the asset earned a rupee of Indian-taxable income. The Schedule FA Black Money Act framework combines the foreign asset schedule in the income tax return with a separate law, the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, which carries penalties and, for wilful cases, prison. It matters most for returning NRIs from Aurora, Naperville or Chicago who bring U.S. accounts back to Pune, Bengaluru or Hyderabad. A one-time scheme, FAST-DS 2026, is open until December 31, 2026.

Who must report foreign assets?

Section 263(1)(a)(ix) of the Income-tax Act, 2025 requires a return for a person who is a resident other than not ordinarily resident and who, at any time in the tax year, holds any asset (including a financial interest in an entity) located outside India as beneficial owner or otherwise, has signing authority in an account outside India, or is a beneficiary of a foreign asset. Section 263(1)(b) makes the return mandatory regardless of income or loss, so a returnee with a small Indian salary but a U.S. brokerage account still files. The Black Money Act penalty and prosecution sections cover the same group.

Check your status each year; see India residency rules. A returning NRI who is RNOR has no Schedule FA duty in those years, but the first year of ordinary residence requires disclosure of everything held at any time that year.

Schedule FA Black Money Act rules: what must you list?

The ITR-2 schema for AY 2026-27 lists these parts of Schedule FA:

• Foreign depository (bank) accounts and foreign custodial accounts
• Foreign equity and debt interests
• Cash-value insurance contracts and annuities
• Financial interest in any entity
• Immovable property outside India
• Other capital assets
• Accounts where you have signing authority
• Trusts outside India where you are a trustee, beneficiary or settlor
• Other income derived from sources outside India

For a bank account the schedule asks for country, institution, address, account number, your status (owner, beneficial owner or beneficiary), opening date, peak balance during the year, closing balance and interest accrued. Foreign retirement accounts, employee stock plan shares and cash-value policies fall inside these categories. Ask your CA for the reporting period used in the form for your year; the schedule has historically followed a calendar year rather than the April to March year. For rupee conversion, the Black Money Act refers to the State Bank of India telegraphic transfer buying rate for foreign currency balances.

What are the Black Money Act penalties?

The provisos to sections 42 and 43 take assets other than immovable property out of the penalty when their aggregate value is ₹20 lakh or less. The Finance Act, 2026 gives the same relief from prosecution under sections 49 and 50, effective from October 1, 2024. Foreign immovable property is outside the relief, so an unreported flat or plot can be penalised at any value. See also India foreign asset penalties.

What is FAST-DS 2026?

The Foreign Assets of Small Taxpayers Disclosure Scheme, 2026 is in Chapter IV of the Finance Act, 2026. The rules (Notification No. 114/2026) say it came into force on August 16, 2026, the valuation date is March 31, 2026 and the last date is December 31, 2026.

You are eligible if you are a resident, or a non-resident or RNOR who was resident in the year the income arose or the asset was acquired. You declare electronically in Form 1; an order in Form 2 follows within a month of the month of declaration; you pay within two months (two more are allowed at 1% simple interest a month), then intimate payment in Form 3 and receive the Form 4 order. Payment is final and non-refundable, and a valid declaration gives immunity from further tax, penalty and prosecution under the Black Money Act for the declared asset or income up to the year ending March 31, 2026. The scheme does not cover proceeds of crime or years for which Black Money Act assessments are complete.

Valuation follows the rules: a foreign bank account at the sum of deposits made until March 31, 2026 (not the balance), quoted shares at the higher of cost and the day's average of lowest and highest price, and foreign property at the higher of cost and market value, converted at the RBI reference rate.

How to comply: a short checklist

1. Determine status for each year with your CA.
2. List every account and asset abroad: banks, brokerage, 401(k) and IRA, stock plans, insurance, property, accounts you can sign on.
3. Convert to rupees using the method your CA specifies.
4. Complete Schedule FA in ITR-2 or ITR-3, and report foreign-source income. Claim any foreign tax credit using the forms in India foreign tax credit and Form 67.
5. Assess gaps. If past returns omitted assets, ask your CA now whether FAST-DS fits; about ten weeks remain.

A worked example

Kavya spent nine years in Naperville and returned to Pune in June 2026. For FY 2026-27 she is RNOR, so she has no Schedule FA duty that year. Two years later she becomes an ordinarily resident and must then list her U.S. brokerage account, 401(k) and bank accounts, including everything she held at any time in that year.

Mohan returned to Hyderabad in 2022 and became an ordinarily resident from FY 2023-24. His returns never listed a U.S. brokerage account bought from salary he earned while a non-resident, now worth ₹2.5 crore. That is a category 2 case under FAST-DS: a ₹1 lakh fee, if he declares by December 31, 2026, instead of exposure to the ₹10 lakh penalty and prosecution risk for a foreign asset left out of the return.

Mistakes to avoid

• Treating a 401(k), IRA or stock plan as "not income, so not reportable".
• Ignoring inherited or co-owned accounts where you are a beneficiary or signatory.
• Reporting only the closing balance, when the schedule also asks for the peak balance during the year.
• Assuming the ₹20 lakh relief covers real estate.

U.S. side

If you remain a U.S. citizen or green card holder after returning, you still file FBAR and Form 8938 for the same accounts (the FBAR threshold is $10,000 in aggregate; Form 8938 thresholds for U.S. persons living abroad start at $200,000 at year end for an unmarried filer). The U.S. and Indian schedules should agree on balances, ownership and dates. India and the United States exchange account information under the FATCA agreement, so differences invite questions. See FBAR, foreign account reporting compared and moving from the U.S. to India: tax checklist.

How we can help

From Aurora, Illinois, our CPA firm assembles the U.S. account list, values and dates so your Indian CA can complete Schedule FA consistently, and handles the FBAR, Form 8938 and U.S. return. We do not prepare Indian returns, make FAST-DS declarations or advise on Indian criminal exposure; an Indian CA or lawyer does that. See foreign account and asset reporting and relocation and immigration tax planning. The India hub has the rest of the series.

Frequently asked questions

General information only. It is not tax, legal, accounting or immigration advice for your situation, and rules change; confirm the current rules with the official source or a licensed professional in the relevant country.