Tax on Foreign Assets

[VGisHere]

TL;DR
1. How to fill in the Jan-March gap as the FA is generated on calendar basis and NOT on Indian FY basis?
2. What are implications if one declares US Stock transactions between Jan-March in next ITR instead of current one? Is it possible?
3. Leads for trusted CAs with nominal pricing?

Details
It's the ITR season once again!
But this time would be different for lot of people like me who decided to invest globally, knowing little about the complicated taxation waiting to knock our doors.

As owner of foreign assets, and/or getting dividends or foreign income, one has to fill in ITR-2.
The amount of information one has to enter in ITR-2 is mind-boggling, so many prefer to go through CA route, and CA makes a hefty amount during this ITR season.

Now, CAs typically take anywhere between 5k to 10% of tax saved. But in my condition, I haven't even barely made that much profit from US Stocks. And given that older params are almost same, I believe that hiring CA would be a financial loss overall (also, I wouldn't even be aware of tax complications involved, so no mental gain as well).

So, filing ITR-2 on my own will not only help me save my 2 cents but also help me gain knowledge on tax complications as well.

But... But... But...
Had taxes been that easy, why would one need a CA to do the work?

So far, I have gone through many of the stuff, but have been left little bewildered. I believe that some insights on the same could be very helpful.
Let's take up a scenario of a person with some US stocks transactions as follows -
1. Buys ABC on 1st March, 2022 worth $1000 (INR 75k) and receives dividend income of $5 (TDS - $1.25)
2. Sells half of ABC on 25th March, 2022 worth $500 (sold for $600, making $100 in STCG).
3. Buys XYZ on 1st April, 2022 worth $2000 (INR 155k)
4. Sells XYZ on 21st April, 2022 worth $1500 (sold for $1400, net loss of $100)
5. Receives dividend from ABC + XYZ worth $10 on 1st May, 2022. (TDS - $2.5)
6. Buys TMP on 1st October, 2022 worth $2500 (INR 200k)
7. Receives dividend from ABC + XYZ + TMP worth $20 on 31st December, 2022 (TDS - $5)
8. Receives dividend from ABC + XYZ + TMP worth $25 on 31st March (TDS - $6.25)
* Values hypothetical and rounded off for ease

	1st Jan - 31st March, 2022	1st April - 31st December, 2022	1st Jan - 31st March, 2023
Assets	ABC - $500 - INR 37.5k	ABC - $ 500 - INR 37.5k XYZ - $ 500 - INR 37.75k TMP - $ 2500 - INR 200k	ABC - $ 500 - INR 37.5k XYZ - $ 500 - INR 37.75k TMP - $ 2500 - INR 200k
Dividend	ABC - $5 - INR 75*5	$10 (INR 755) + $20 (INR 1600)	$25 (INR 2200)
TDS	ABC - $1.25 - INR 75*1.25	$2.5 (INR 755/4) + $5 (INR 400)	$6.25 (INR 550)
Capital Gains	$100 - INR 7.5k	- $100 (INR 7550) (negative)	NIL

Now, coming to filling ITR-2 in India, what would be values that need to be filled in multiple schedules relating to FA.
My queries/assumptions are as follows, would need some more pair of eyes for feedback and share any faults spotted!

1. Period of 1st Jan - 31st March, 2022 would NOT be included for FY2022-23 for ITR. But, FA statement provided follows calendar year. Also, mentioned here, one does not need to disclose transactions of Jan-Mar 2022. Now, where should one include transactions between Jan-March? This ITR or next ITR?

On similar lines, what time duration to be followed for the following, as is the description accurate?
2. Schedule Foreign Source Income: Similar values to SCG?
3. Schedule Tax Relief under sections 90, 90A, or 91: Details of the TDS deducted as per above table!
4. Schedule Capital Gains:
(i) Dividend Gross (ai+aii’): in INR (as per row 2 of above table)
(ii) Short-Term Capital Gain: Values from last row in the above table
5. Schedule FA: Values from first row in above table!

 

[theglobalinvestor]

Not exactly the answer to your questions, but relevant...

Beware: Tax Complexity – The Global Investor

 

[mr_vasanth]

TL;DR
1. How to fill in the Jan-March gap as the FA is generated on calendar basis and NOT on Indian FY basis?
2. What are implications if one declares US Stock transactions between Jan-March in next ITR instead of current one? Is it possible?
3. Leads for trusted CAs with nominal pricing?

Details
It's the ITR season once again!
But this time would be different for lot of people like me who decided to invest globally, knowing little about the complicated taxation waiting to knock our doors.

As owner of foreign assets, and/or getting dividends or foreign income, one has to fill in ITR-2.
The amount of information one has to enter in ITR-2 is mind-boggling, so many prefer to go through CA route, and CA makes a hefty amount during this ITR season.

Now, CAs typically take anywhere between 5k to 10% of tax saved. But in my condition, I haven't even barely made that much profit from US Stocks. And given that older params are almost same, I believe that hiring CA would be a financial loss overall (also, I wouldn't even be aware of tax complications involved, so no mental gain as well).

So, filing ITR-2 on my own will not only help me save my 2 cents but also help me gain knowledge on tax complications as well.

But... But... But...
Had taxes been that easy, why would one need a CA to do the work?

So far, I have gone through many of the stuff, but have been left little bewildered. I believe that some insights on the same could be very helpful.
Let's take up a scenario of a person with some US stocks transactions as follows -
1. Buys ABC on 1st March, 2022 worth $1000 (INR 75k) and receives dividend income of $5 (TDS - $1.25)
2. Sells half of ABC on 25th March, 2022 worth $500 (sold for $600, making $100 in STCG).
3. Buys XYZ on 1st April, 2022 worth $2000 (INR 155k)
4. Sells XYZ on 21st April, 2022 worth $1500 (sold for $1400, net loss of $100)
5. Receives dividend from ABC + XYZ worth $10 on 1st May, 2022. (TDS - $2.5)
6. Buys TMP on 1st October, 2022 worth $2500 (INR 200k)
7. Receives dividend from ABC + XYZ + TMP worth $20 on 31st December, 2022 (TDS - $5)
8. Receives dividend from ABC + XYZ + TMP worth $25 on 31st March (TDS - $6.25)
* Values hypothetical and rounded off for ease

	1st Jan - 31st March, 2022	1st April - 31st December, 2022	1st Jan - 31st March, 2023
Assets	ABC - $500 - INR 37.5k	ABC - $ 500 - INR 37.5k XYZ - $ 500 - INR 37.75k TMP - $ 2500 - INR 200k	ABC - $ 500 - INR 37.5k XYZ - $ 500 - INR 37.75k TMP - $ 2500 - INR 200k
Dividend	ABC - $5 - INR 75*5	$10 (INR 755) + $20 (INR 1600)	$25 (INR 2200)
TDS	ABC - $1.25 - INR 75*1.25	$2.5 (INR 755/4) + $5 (INR 400)	$6.25 (INR 550)
Capital Gains	$100 - INR 7.5k	- $100 (INR 7550) (negative)	NIL

Now, coming to filling ITR-2 in India, what would be values that need to be filled in multiple schedules relating to FA.
My queries/assumptions are as follows, would need some more pair of eyes for feedback and share any faults spotted!

1. Period of 1st Jan - 31st March, 2022 would NOT be included for FY2022-23 for ITR. But, FA statement provided follows calendar year. Also, mentioned here, one does not need to disclose transactions of Jan-Mar 2022. Now, where should one include transactions between Jan-March? This ITR or next ITR?

On similar lines, what time duration to be followed for the following, as is the description accurate?
2. Schedule Foreign Source Income: Similar values to SCG?
3. Schedule Tax Relief under sections 90, 90A, or 91: Details of the TDS deducted as per above table!
4. Schedule Capital Gains:
(i) Dividend Gross (ai+aii’): in INR (as per row 2 of above table)
(ii) Short-Term Capital Gain: Values from last row in the above table
5. Schedule FA: Values from first row in above table!

I am in same boat. Did you get an answer from anyone ? The cleartax CAs are most useless bunch of folks. cleartax has assigned some trainees who are learning from us rather than giving us a solution.

I am filing form 67 for some dividends I received from RSUs vested. The US tax document (Form 1042-S) is for the Jan to Dec 2022 period, but I have received some dividend in Mar 2023 as well. When filing form 67, should I report dividends from April 2022 to March 2023 or the dividends from Jan 2022 to Dec 2022 ? I am confused as it is mandatory to upload form 1042-S while filing form67. Can some tax experts guide ?

 

[knight]

This year we’ll only report jan-dec 22 txns and gains

Jan23 - dec 23 will go in next ITR.
That’s how US investments work.


Ps - not an advisor. Answer is based in what i read online and how my CA filed it.

 

[knight]

There are a few videos on youtube reg ITR filing with US stocks. Check them out.

 

[WhoU]

Foreign assets reporting needs to be done on CY basis.
Income/loss from share buying/selling and dividends needs to be done on FY basis.

 

[mr_vasanth]

Foreign assets reporting needs to be done on CY basis.
Income/loss from share buying/selling and dividends needs to be done on FY basis.

Hi @Kem_cho
I have a question regarding this point "Income/loss from share buying/selling and dividends needs to be done on FY basis."

>> In this case there will be difference b/w the dividend income captured in the form 1042-S and what we submit in the ITR right ?
>> The dividend income captured in the form 1042-S will be from Jan to Dec 2022.
>> In the ITR we will be showing the dividend income from Apr-2022 to Mar-2023.

Will we not get notice from IT dept. if there is this difference b/w form 1042-S and the dividend income shown in the ITR ?

Thanks
Vasanth

 

[mr_vasanth]

This year we’ll only report jan-dec 22 txns and gains

Jan23 - dec 23 will go in next ITR.
That’s how US investments work.


Ps - not an advisor. Answer is based in what i read online and how my CA filed it.

The dividend income from RSU/ESOP shares is treated the same way explained ?
I have been filing ITR with cleartax for the past 4 years. Every year cleartax is assigning a new CR and I am getting inconsistent answer from every CA.

 

[SSV]

I am in same boat. Did you get an answer from anyone ? The cleartax CAs are most useless bunch of folks. cleartax has assigned some trainees who are learning from us rather than giving us a solution.

I am filing form 67 for some dividends I received from RSUs vested. The US tax document (Form 1042-S) is for the Jan to Dec 2022 period, but I have received some dividend in Mar 2023 as well. When filing form 67, should I report dividends from April 2022 to March 2023 or the dividends from Jan 2022 to Dec 2022 ? I am confused as it is mandatory to upload form 1042-S while filing form67. Can some tax experts guide ?

Please go through this official document from ITD:
It is actually very straight forward for US repatriates... For me (from Oz) it is complex...

Please go thru the relevant section from page 43 of this document:
"Schedule FA ‐ Details of Foreign Assets and Income from any source outside India"

https://www.incometax.gov.in/iec/foportal/sites/default/files/2021-05/Instructions_ITR2_AY2021_22.pdf

Here is the relevant extract from this document:


In table F, the details of trusts set up under the laws of a country outside India in which you are a trustee, beneficiary or settlor is required to be disclosed. In case any income derived from such trust is taxable in your hands in India, please specify the amount of income which is chargeable to tax in India at column (10) and the relevant Schedule of the ITR at column (11) and (12).
In table G, the details of any other income, derived from any foreign source, which is not included in the tables A1 to F above is required to be disclosed. In case any income out of the income derived from foreign source is taxable in your hands in India, please specify the amount of income which is chargeable to tax in India at column (7) and the relevant Schedule of the ITR at column (8) and (9).
For the purpose of this Schedule, the accounting period means the period comprising:‐
(a) from 1st January, 2020 to 31st December, 2020 in respect of foreign assets or accounts etc. held in those jurisdictions where calendar year is adopted as basis for the purpose of closing of accounts and tax filings;
(b) from 1st April, 2020 to 31st March, 2021 in respect of foreign assets or accounts etc. held in those jurisdictions where financial year is adopted as basis for the purpose of closing of accounts and tax filings; or
(c) that period of 12 months, which ends on any day succeeding 1st April, 2020, in respect of foreign assets or accounts held in those jurisdictions where any other period of 12 months is adopted as basis for the purpose of closing of accounts and tax filings.

For the purpose of this Schedule, the rate of exchange for conversion of the peak balance or value of investment or the amount of foreign sourced income in Indian currency shall be the “telegraphic transfer buying rate” of the foreign currency as on the date of peak balance in the account or on the date of investment or the closing date of the accounting period.
For the purposes of this Schedule, "telegraphic transfer buying rate", in relation to a Instructions to Form ITR-2 (AY 2021-22) foreigncurrency, means the rate or rates of exchange adopted by the State Bank of India constituted under the State Bank of India Act, 1955 (23 of 1955), for buying such currency, having regard to the guidelines specified from time to time by the Reserve Bank of India for buying such currency, where such currency is made available to that bank through a telegraphic transfer. If you have held foreign assets during the previous year which have been duly reported in the Schedule FA. Even then you are required to report such foreign asset again in the Schedule AL (if applicable)

 

[mr_vasanth]

Please go through this official document from ITD:
It is actually very straight forward for US repatriates... For me (from Oz) it is complex...

Please go thru the relevant section from page 43 of this document:
"Schedule FA ‐ Details of Foreign Assets and Income from any source outside India"

https://www.incometax.gov.in/iec/foportal/sites/default/files/2021-05/Instructions_ITR2_AY2021_22.pdf

Here is the relevant extract from this document:


In table F, the details of trusts set up under the laws of a country outside India in which you are a trustee, beneficiary or settlor is required to be disclosed. In case any income derived from such trust is taxable in your hands in India, please specify the amount of income which is chargeable to tax in India at column (10) and the relevant Schedule of the ITR at column (11) and (12).
In table G, the details of any other income, derived from any foreign source, which is not included in the tables A1 to F above is required to be disclosed. In case any income out of the income derived from foreign source is taxable in your hands in India, please specify the amount of income which is chargeable to tax in India at column (7) and the relevant Schedule of the ITR at column (8) and (9).
For the purpose of this Schedule, the accounting period means the period comprising:‐
(a) from 1st January, 2020 to 31st December, 2020 in respect of foreign assets or accounts etc. held in those jurisdictions where calendar year is adopted as basis for the purpose of closing of accounts and tax filings;
(b) from 1st April, 2020 to 31st March, 2021 in respect of foreign assets or accounts etc. held in those jurisdictions where financial year is adopted as basis for the purpose of closing of accounts and tax filings; or
(c) that period of 12 months, which ends on any day succeeding 1st April, 2020, in respect of foreign assets or accounts held in those jurisdictions where any other period of 12 months is adopted as basis for the purpose of closing of accounts and tax filings.

For the purpose of this Schedule, the rate of exchange for conversion of the peak balance or value of investment or the amount of foreign sourced income in Indian currency shall be the “telegraphic transfer buying rate” of the foreign currency as on the date of peak balance in the account or on the date of investment or the closing date of the accounting period.
For the purposes of this Schedule, "telegraphic transfer buying rate", in relation to a Instructions to Form ITR-2 (AY 2021-22) foreigncurrency, means the rate or rates of exchange adopted by the State Bank of India constituted under the State Bank of India Act, 1955 (23 of 1955), for buying such currency, having regard to the guidelines specified from time to time by the Reserve Bank of India for buying such currency, where such currency is made available to that bank through a telegraphic transfer. If you have held foreign assets during the previous year which have been duly reported in the Schedule FA. Even then you are required to report such foreign asset again in the Schedule AL (if applicable)

From this section, I understand that I don't need to show the USA dividend income earned from Jan to Mar 2023 in the FY22-23 ITR. I can show it in the next year (FY23-24) ITR. Is my understanding correct ?

 

[SSV]

From this section, I understand that I don't need to show the USA dividend income earned from Jan to Mar 2023 in the FY22-23 ITR. I can show it in the next year (FY23-24) ITR. Is my understanding correct ?

Yes,
US guys should follow Jan1 to Dec 31 for both Foreign assets and Foreign Income as accounting period for them defined as CY.

For the purpose of this Schedule, the accounting period means the period comprising:‐
(a) from 1st January, 2020 to 31st December, 2020 in respect of foreign assets or accounts etc. held in those jurisdictions where calendar year is adopted as basis for the purpose of closing of accounts and tax filings;

 

[SSV]

I am in same boat. Did you get an answer from anyone ? The cleartax CAs are most useless bunch of folks. cleartax has assigned some trainees who are learning from us rather than giving us a solution.

Local CA s are of no use in this regard because they don't come across these kind of cases .. Most of them don't even know FA schedule..
My experienced CA friend told me that I know way more than any practising CA in Hyderabad in this particular FA schedule..( Note : I have finance background in my previous career).

To my knowlegde these guys are the best in India in this space:

FemaOnline » Welcome

I haven't contacted them yet but I will soon do it as my tax matters become more complex..
Meanwhile if anyone contacts them please share your experience here

 

[knight]

Local CA s are of no use in this regard because they don't come across these kind of cases .. Most of them don't even know FA schedule..
My experienced CA friend told me that I know way more than any practising CA in Hyderabad in this particular FA schedule..( Note : I have finance background in my previous career).

To my knowlegde these guys are the best in India in this space:

FemaOnline » Welcome

I haven't contacted them yet but I will soon do it as my tax matters become more complex..
Meanwhile if anyone contacts them please share your experience here

That's true.
Most CA s are not aware of these things, even I had to guide my CA through the process.
Luckily we also had a more experienced CA with us who was able to confirm and clear our doubts.

 

[mr_vasanth]

Local CA s are of no use in this regard because they don't come across these kind of cases .. Most of them don't even know FA schedule..
My experienced CA friend told me that I know way more than any practising CA in Hyderabad in this particular FA schedule..( Note : I have finance background in my previous career).

To my knowlegde these guys are the best in India in this space:

FemaOnline » Welcome

I haven't contacted them yet but I will soon do it as my tax matters become more complex..
Meanwhile if anyone contacts them please share your experience here

Thanks a lot for the contact. Since I have already made payment to cleartax I have to go with them this year. From next year I am planning to switch. Cleartax experience is nothing but pathetic for me.

 

[mr_vasanth]

Yes,
US guys should follow Jan1 to Dec 31 for both Foreign assets and Foreign Income as accounting period for them defined as CY.

For the purpose of this Schedule, the accounting period means the period comprising:‐
(a) from 1st January, 2020 to 31st December, 2020 in respect of foreign assets or accounts etc. held in those jurisdictions where calendar year is adopted as basis for the purpose of closing of accounts and tax filings;

Thanks a lot @S S V for clearing my doubts.

 

[SSV]

That's true.
Most CA s are not aware of these things, even I had to guide my CA through the process.
Luckily we also had a more experienced CA with us who was able to confirm and clear our doubts.

May I know who are these guys and where are they located??

 

[SSV]

Thanks a lot for the contact. Since I have already made payment to cleartax I have to go with them this year. From next year I am planning to switch. Cleartax experience is nothing but pathetic for me.

Thanks a lot @S S V for clearing my doubts.

No worries.
In my view, it is not worth going for an inferior quality service for the tax matters. Its always best to go the best to the best of our knowledge in tax matters.(oops too many best s !!!)..
As they say, there are two things that we can't avoid in our life wherever you go in this world.. 1) Death and 2) Taxes...
So it is better to leave the tax matters to the experts.. and channelise our energies to optimize our income rather than spending our valuable time to how to reduce/avoid incidence of tax...
Too much philosophy from me for the day...
I should stop now...
All the best

 

[sarcasm99]

I know this post thread is 1 year old just wanted to confirm if the rules/ sections are same for this year also na ? ... Because I purchased US stocks in February 2024 and recieved only dividend till March 31,2024... Didn't sell any stocks till 31 March 2024 .... So can I simply fill ITR-1? And not show anything related to US stocks , correct?

 

[SSV]

I know this post thread is 1 year old just wanted to confirm if the rules/ sections are same for this year also na ? ... Because I purchased US stocks in February 2024 and recieved only dividend till March 31,2024... Didn't sell any stocks till 31 March 2024 .... So can I simply fill ITR-1? And not show anything related to US stocks , correct?

No..
You have to declare all foreign income / assets held duirng FY under FA schedule..
In your case you have to file ITR2 and fill FA schedule.
Contact CA.

 

[sarcasm99]

Yes,
US guys should follow Jan1 to Dec 31 for both Foreign assets and Foreign Income as accounting period for them defined as CY.

For the purpose of this Schedule, the accounting period means the period comprising:‐
(a) from 1st January, 2020 to 31st December, 2020 in respect of foreign assets or accounts etc. held in those jurisdictions where calendar year is adopted as basis for the purpose of closing of accounts and tax filings;

But in this message you have written CY?