Schedule FA US stocks India: complete ITR-2 guide 2026

An engineer at a Bengaluru tech firm bought $500 worth of S&P 500 ETFs through a US-investing app in November 2022. Small amount. Routine transaction under the LRS. She filed ITR-2 for FY 2022-23 but skipped Schedule FA because she thought it applied only to "big" foreign accounts. By FY 2024-25, her US portfolio had grown to $11,000. She still hadn't filed Schedule FA for any of those years.

In June 2026, she received a notice from the Income Tax Department's Foreign Asset Investigation Unit citing Section 42 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. The proposed penalty: ₹10 lakh per year of non-disclosure across three assessment years. Total exposure: ₹30 lakh — on a portfolio worth roughly ₹9 lakh.

This is not a hypothetical. The IT Department has been cross-referencing LRS outflows reported by AD banks under FEMA with ITR filings since at least FY 2022-23, and notices have been going out systematically since 2025. The data matching is automated.

If you hold US stocks — through Vested, Rovia, INDmoney, IBKR, Dhan, or any other platform — and you are a Resident and Ordinarily Resident in India, Schedule FA is mandatory. This guide covers everything you need to file it correctly.

Filing for AY 2026-27? The ITR-2 deadline for non-audit cases is 31 July 2026. Schedule FA must be filed as part of the same return — it is not a separate form.

What is Schedule FA?

Schedule FA stands for Schedule of Foreign Assets. It is a mandatory disclosure schedule embedded inside ITR-2 and ITR-3 under the Income Tax Act, 1961. It was introduced pursuant to India's obligations under the Common Reporting Standard (CRS) and the Foreign Account Tax Compliance Act (FATCA) inter-governmental agreement with the United States, and was substantially expanded in scope after the Black Money Act came into force in 2015.

Schedule FA requires an individual to disclose every foreign financial asset and account held at any time during the financial year — even if the account was opened and closed within the same year, and even if the balance was zero on 31 March.

The disclosure is not about taxation of the asset. You still pay tax on capital gains in Schedule CG and on dividend income in Schedule OS. Schedule FA is purely an asset disclosure — a "here is what I hold abroad" statement to the Indian government.

The seven parts of Schedule FA

Schedule FA is divided into seven parts, each covering a different category of foreign asset:

Part	Asset category	Relevant for US stock investors?
Part A	Foreign bank accounts (savings, current, fixed deposit)	Only if you have a US bank account (e.g., a USD account at Chase or Bank of America)
Part B	Financial interest in a foreign entity or place of business (shareholding, partnership, beneficial interest in a company)	Relevant if you directly own shares in a foreign private company (not publicly listed shares through a broker)
Part C	Immovable property outside India	Not relevant for stock investors unless they own US real estate
Part D	Any other capital asset outside India	Primary disclosure for US stocks, ETFs, and brokerage accounts
Part E	Accounts in which you have signing authority but no beneficial ownership (e.g., company accounts you operate)	Rare for retail investors
Part F	Trusts outside India in which you are settlor, trustee, or beneficiary	Not relevant for most retail investors
Part G	Foreign insurance policies or annuity contracts	Relevant only if you hold a foreign life insurance or annuity

US stocks held through a US brokerage account are disclosed under Part D. The account at the broker — Vested, Rovia, IBKR, Charles Schwab, Fidelity — is the "capital asset" being disclosed. You disclose the account, not each individual stock inside it.

Who must file Schedule FA

Resident and Ordinarily Resident (ROR) — mandatory

If you are a Resident and Ordinarily Resident (ROR) under the Income Tax Act for the relevant financial year, you must disclose all foreign assets in Schedule FA. There are no exceptions, no minimum-value thresholds, and no exemptions for "small" portfolios.

You are ROR for a financial year if:

You were in India for 182 days or more during the financial year (FY 2025-26 = 1 April 2025 to 31 March 2026), and
You were in India for 365 days or more during the four years preceding the financial year, and
You were Resident in India for at least 2 of the 10 years preceding the financial year.

Most salaried professionals living and working in India year-round are ROR. If you have not travelled abroad for extended periods, you are almost certainly ROR.

Not Ordinarily Resident (NOR) — partial obligation

An individual who qualifies as Resident but Not Ordinarily Resident (RNOR) is liable to tax in India only on income received or accrued in India, or income from a business controlled from India. However, the Schedule FA disclosure obligation under the Black Money Act is broader than the tax obligation — and this is where it gets complex.

The RNOR status typically applies to:

Returning NRIs who became Resident in India but have not yet satisfied the 730-days-in-4-years condition
Individuals who were non-resident for 9 of the 10 preceding years

Prudent approach for RNORs: Disclose foreign assets in Schedule FA even if you believe the underlying income is not taxable in India. The penalty risk under the Black Money Act for non-disclosure is severe enough that the conservative position is to always disclose.

Non-Resident Indians (NRIs) — generally exempt for assets acquired while NRI

An NRI who does not meet the Indian "resident" test is generally not required to file Schedule FA for foreign assets acquired and maintained while non-resident. If an NRI returns to India and becomes ROR, the assets they held as NRI must be disclosed from the first year they become ROR.

Critical nuance: The "resident" test under the Income Tax Act and the "resident" test under FEMA are different:

Test	What it determines	Days threshold
Income Tax Act, Section 6	Whether you pay Indian income tax on global income	182 days in India in the FY (primary test)
FEMA, Section 2(v)	Whether you need RBI permission for foreign transactions	182 days in India in the preceding FY

FEMA residency determines whether your LRS remittances and your US brokerage account are permissible without RBI permission. Income Tax residency determines whether you pay Indian tax on the income from those accounts and whether you must file Schedule FA. They are independent tests. You can be a FEMA non-resident (just returned to India in March) but still be an Income Tax resident if you spent 182+ days in India during the FY.

Which ITR form to use

You cannot use ITR-1 (Sahaj) if you hold US stocks or any foreign asset.

ITR-1 does not contain Schedule FA. Filing ITR-1 when you hold foreign assets is a defective return under Section 139(9) and will generate an automatic notice asking you to file the correct form.

Your situation	Correct ITR form
Salaried employee + US stocks + no business income	ITR-2
Freelancer / consultant / business owner + US stocks	ITR-3
Partner in a firm + US stocks	ITR-3
Director in a company + US stocks	ITR-2 (if no other business income)
Presumptive taxation under Section 44ADA/44AE	ITR-4 does not support Schedule FA — you must shift to ITR-3

Note on ITR-4 (Sugam): If you file ITR-4 under a presumptive taxation scheme and acquire US stocks during the year, you must switch to ITR-3. ITR-4 does not have Schedule FA. This is a common mistake among consultants who file ITR-4 for their professional income.

What exactly to disclose for US stocks — Part D walkthrough

Part D of Schedule FA is titled "Details of any other capital asset held (including financial interest in any entity) outside India."

For a typical US brokerage account holding publicly listed US stocks or ETFs, you fill Part D once per brokerage account. Here are the fields and what to enter:

Field 1: Country name and code

Entry: United States / US

The country drop-down in the ITR utility uses the standard country codes. Select "United States of America" — the code is typically "US" or "USA" depending on the year's utility version.

Field 2: Name of the institution / entity in which the financial interest is held

Entry: The name of your US broker or platform.

Examples:

If you invest through Vested: "Vested Finance Inc." or "DriveWealth LLC" (DriveWealth is Vested's US clearing partner — use the name as it appears on your account statements)
If you invest through Rovia: "Rovia Inc." or the underlying US broker's name (check your account agreement)
If you use Interactive Brokers directly: "Interactive Brokers LLC"
If you use Charles Schwab: "Charles Schwab & Co., Inc."
If you use Fidelity: "Fidelity Brokerage Services LLC"

Use the legal entity name as it appears on your account statements or account agreement, not the brand name of the Indian-facing app.

Field 3: Address of the institution

Entry: The registered US address of the broker.

DriveWealth LLC: 97 Main Street, Suite 201, Chatham, NJ 07928, USA
Interactive Brokers LLC: One Pickwick Plaza, Greenwich, CT 06830, USA
Charles Schwab: 211 Main Street, San Francisco, CA 94105, USA
Fidelity Brokerage Services: 900 Salem Street, Smithfield, RI 02917, USA

Check your account agreement or the broker's website for the current registered address. Do not invent an address.

Field 4: Zip code / postal code

Entry: The US ZIP code of the broker's registered address.

Field 5: Nature of the asset

Entry: "Equity shares in listed companies" or "Listed equity shares and ETFs" or simply "Brokerage account holding listed US securities."

There is no standardised drop-down for this field in all ITR utility versions — some versions ask for a free-text description. Be descriptive but concise.

Field 6: Date of acquisition (date of opening the account / first investment)

Entry: The date on which you first funded your US brokerage account or made your first investment.

If you opened the account in multiple tranches or over time, use the date of first investment. This is the "date since when asset is held" — not necessarily your first purchase of a specific stock.

Where to find it: Your broker's account statement or the account opening confirmation email.

Field 7: Total investment (amount invested in INR)

Entry: The total amount you have remitted to the US brokerage account from India, converted to INR.

This is your cumulative LRS outflow into the account. If you have remitted USD 5,000 in Year 1 and USD 3,000 in Year 2 for a total of USD 8,000, you report the INR equivalent of your total remittances, converted at the rates prevailing on each remittance date.

Note: This is the cost of investment, not the current market value. This field captures your investment outflow, not fair value.

Field 8: Income accrued from the asset during the year

Entry: Total dividends received in your brokerage account during the financial year (1 April to 31 March), converted to INR using the RBI reference rate or SBI TTBR on the date of receipt.

If your US stocks or ETFs paid zero dividends (common for growth-oriented portfolios holding stocks like Amazon, Alphabet Class C, Berkshire Hathaway B), enter zero or leave blank.

If you received dividends — for example, from VOO (Vanguard S&P 500 ETF), VTI, or individual dividend-paying stocks — aggregate all dividends received during the year and enter the INR equivalent.

Important: Dividends from US stocks are subject to 25% US withholding tax under the default US-India tax treaty (or 15% under Article 10 if you have an Indian tax residency certificate filed with the broker). The net amount deposited into your account is after this withholding. For Schedule FA income disclosure, report the gross dividend before withholding — the withheld amount is claimable as Foreign Tax Credit in Form 67 / Schedule FSI of your ITR.

Field 9: Peak balance / peak value during the year (in INR)

Entry: The highest market value of your brokerage account at any point during the financial year, converted to INR.

This is the most operationally complex field. The "peak balance" is not necessarily the 31 March balance — it is the highest value the account reached at any point during the year.

How platforms handle peak balance:

Most US brokers do not explicitly report "peak balance" — you need to check monthly statements or portfolio snapshots
Vested and Rovia provide Schedule FA reports that calculate peak balance from daily portfolio snapshots
For IBKR accounts, you can use the "Portfolio Analyst" or monthly statements to identify the month with the highest value, then use the end-of-month balance as a proxy

Practical approach when exact peak is unavailable: Use the highest month-end value visible in your monthly statements as the peak balance. Document your methodology. While the ideal is the true intra-year peak, the IT Department's primary concern is approximate correctness and good-faith compliance — month-end proxies are widely accepted by CAs.

Field 10: Closing balance at year-end (31 March) in INR

Entry: The market value of your brokerage account as of 31 March of the financial year, converted to INR using the RBI reference rate for USD/INR on 31 March.

For AY 2026-27 (FY 2025-26): Use the RBI reference rate for USD/INR on 31 March 2026.

If 31 March falls on a bank holiday or weekend (as it sometimes does), use the rate for the last working day of March or the rate published by RBI/FBIL for that date.

The exchange rate question — which rate to use

This is one of the most common points of confusion and CA disagreement in Schedule FA filings. Here is the authoritative breakdown.

RBI reference rate vs SBI TTBR — what's the difference?

RBI reference rate (FBIL rate): The Financial Benchmarks India Private Limited (FBIL) publishes the official USD/INR reference rate daily, which is the rate used by the Reserve Bank of India for official purposes. This rate is a mid-market rate — it is neither a buying rate nor a selling rate, but the midpoint between the two.

SBI Telegraphic Transfer Buying Rate (TTBR): The State Bank of India publishes daily TT rates — the rate at which SBI buys foreign currency from customers. The TTBR is slightly below the mid-market rate (more favourable to the bank, less favourable to the customer selling USD). The TTBR is used in tax law in specific contexts — notably for computing the cost of acquisition of foreign assets in INR under Section 48 of the Income Tax Act.

SBI Telegraphic Transfer Selling Rate (TTSR): The rate at which SBI sells foreign currency to customers — slightly above mid-market.

Which rate applies to which Schedule FA field?

Field	Applicable rate	Rationale
Closing balance (31 March)	RBI reference rate / FBIL rate on 31 March	Standard for foreign asset valuation
Peak balance	RBI reference rate / FBIL rate on the peak date	Same principle
Income accrued (dividends)	RBI reference rate / FBIL rate on date of receipt	Income conversion for Schedule OS purposes
Cost of acquisition (for Schedule CG)	SBI TTBR on the date of purchase	Mandated under Rule 115A for foreign currency assets

The practical reality: Many CAs use the RBI reference rate for all Schedule FA fields consistently. Others use SBI TTBR for cost basis (because Rule 115A mandates it for capital gains computation) and RBI reference rate for valuation fields. Both approaches are defensible for the balance fields. What you must not do is use an arbitrary exchange rate from Google or a currency app.

How to find historical RBI reference rates

The FBIL (Financial Benchmarks India Private Limited) publishes historical USD/INR reference rates at fbil.org.in. Navigate to "FBIL-USD/INR" → "Historical Rates" and download the CSV for the relevant date range.

Alternatively, the RBI website (rbi.org.in) under "Financial Markets" → "Foreign Exchange" → "Reference Rate Archive" publishes the same rates.

For 31 March 2026 specifically: The FBIL USD/INR reference rate on 31 March 2026 was approximately ₹85.70 per USD (check the FBIL/RBI archive for the exact figure — do not rely on this article for the precise rate on any specific date).

How to find historical SBI TTBR

The SBI publishes daily TT rates at sbi.co.in under "Forex / NRI" → "Foreign Exchange Rates." Historical rates are available for download. Some platforms like Rovia automate this lookup and use SBI TTBR for cost-basis calculations in capital gains.

Platform-by-platform: who gives you Schedule FA data and how

One of the practical problems Indian investors face is that different platforms provide wildly different levels of Schedule FA support. Here is where each major platform stands:

Platform	Schedule FA report available?	Format	Exchange rate used	Manual work required?
Vested	Yes — dedicated Schedule FA helper	Field-by-field ITR format	RBI reference rate	Minimal — copy values from report
Rovia	Yes — automated Schedule FA with SBI TT rates	ITR-ready format	SBI TTBR	None for standard accounts
INDmoney	Yes — ITR-format capital gains and FA reports	PDF / Excel	RBI reference rate	Low — some field mapping needed
Interactive Brokers (IBKR)	No — provides US 1099 forms only	US 1099-B / 1099-DIV / 1042-S	USD amounts only	High — manual conversion required
Charles Schwab / Fidelity (direct)	No	US 1099 forms	USD amounts only	High — manual conversion required
Dhan (GIFT City / IFSC)	Unclear — evolving	Varies	Varies	Check with CA
Tickertape (GIFT City / IFSC)	Unclear — evolving	Varies	Varies	Check with CA

Notes on IBKR manual calculation

If you use IBKR directly (not through an Indian platform), you will receive:

1099-B: Proceeds from securities transactions (for US tax purposes — not directly usable for Indian ITR)
1099-DIV: Dividend income
1042-S: Income subject to withholding (if non-resident alien status was claimed with IBKR)

For Schedule FA purposes, you need:

Your account number at IBKR
The USD value of your portfolio on 31 March — available from IBKR's "Portfolio Analyst" or by downloading your account statement for 31 March
The peak USD value during the year — available from IBKR's monthly statements or Portfolio Analyst
Total dividends received during the FY (1 April to 31 March) — available from IBKR's "Reports" → "Tax Documents" → "Dividend Summary"

Convert each of these to INR using the appropriate RBI reference rate or SBI TTBR on the respective dates.

Step-by-step: how to fill Schedule FA in ITR-2 (AY 2026-27)

The following walkthrough is based on the offline ITR-2 utility (Excel-based) and the online filing utility available at the Income Tax e-filing portal (incometax.gov.in). The field names and positions are for AY 2026-27.

Step 1: Download and open the ITR-2 form

Go to incometax.gov.in → "Downloads" → "ITR-2" → "AY 2026-27"
Download the Excel utility or use the online form
Complete your basic personal details, Part B (gross total income), deductions (Chapter VIA), and tax computation before reaching Schedule FA

Step 2: Navigate to Schedule FA

In the ITR-2 Excel utility:

Open the "Schedule FA" tab — it appears after Schedule CG and before Schedule FSI
The tab is labelled "FA" in the ribbon at the bottom of the screen

In the online utility:

After completing income schedules, the form will prompt you with "Do you have any foreign assets or foreign income?" → Select "Yes"
This enables the Schedule FA section

Step 3: Declare the number of entries

Schedule FA asks how many entries you have in each Part. If you have one US brokerage account, you will have:

Part A: 0 (unless you also have a US bank account)
Part D: 1 (your US brokerage account)

If you invest through multiple platforms — say, both Vested and Rovia — you have two separate brokerage accounts and must make two Part D entries.

Step 4: Fill Part D — field by field

Click "Add" in Part D to open a row. Fill in the following:

Field label in ITR-2	What to enter	Example
Country name and code	United States of America / US	United States of America
Name of institution/entity	Legal name of US broker	DriveWealth LLC
Address	US broker's registered address	97 Main Street, Suite 201, Chatham, NJ 07928
Zip code	ZIP code of broker	07928
Nature of asset	Description of holding	Brokerage account holding listed US equities and ETFs
Date of acquisition	Date of first investment	15-Nov-2022
Total investment (INR)	Cumulative LRS amount remitted	₹42,000
Income accrued (INR)	Dividends received during FY in INR	₹1,850
Peak value (INR)	Highest value during FY in INR	₹8,45,000
Closing value (INR)	Portfolio value on 31 March in INR	₹7,92,000

Step 5: Common mistakes to avoid

Mistake 1: Entering the wrong account number Schedule FA does not explicitly have an "account number" field in all versions of the form — the account is identified by the institution name and nature. However, some practitioners recommend noting the account number in the "nature of asset" field as additional identification. Always double-check the legal name of the institution.

Mistake 2: Missing the peak balance Many investors enter only the 31 March closing balance and leave the peak balance blank or equal to the closing balance. If your portfolio peaked in, say, November 2025 at ₹9,00,000 and then declined to ₹7,92,000 by March 2026, the peak balance field must show ₹9,00,000 — not ₹7,92,000. Missing or understating the peak is a common red flag in scrutiny.

Mistake 3: Using the wrong exchange rate Do not use the exchange rate from Google Finance, XE.com, or any non-official source. Use FBIL/RBI reference rates or SBI TT rates only.

Mistake 4: Reporting dividend income only in Schedule FA and not in Schedule OS Schedule FA is a disclosure schedule. Dividend income from US stocks is also taxable income and must be reported separately in Schedule OS (Other Sources) under "Dividend income from foreign sources." The Foreign Tax Credit for US withholding tax on dividends must be claimed in Schedule FSI (Foreign Source Income) and Form 67 (Foreign Tax Credit claim form, to be filed before the due date of the original return).

Mistake 5: Not filing Schedule FA because "the account had no income" The disclosure obligation exists regardless of whether the account generated income. Zero-dividend accounts holding growth stocks must still be disclosed.

Mistake 6: Using ITR-1 Already covered above — ITR-1 cannot be used. If you accidentally filed ITR-1 and have foreign assets, file a revised return in ITR-2 before the deadline.

Mistake 7: Not disclosing accounts that were closed during the year If you held a US brokerage account at any point during the financial year and closed it before 31 March, you still need to disclose it. The closing balance will be zero, but the peak balance, income, and total investment should reflect what actually happened.

Step 6: Complete Schedule FSI and file Form 67

After completing Schedule FA, if you received any dividends from US stocks:

Schedule FSI: Report the gross dividend (before US withholding) in Schedule FSI of ITR-2 under the US-India treaty entry. Select the appropriate Article (Article 10 for dividends).
Form 67: This is a separate form filed on the e-filing portal under "File" → "Income Tax Forms" → "Form 67." File this before or along with your ITR. Form 67 is required to claim the Foreign Tax Credit (FTC) for the 25% or 15% US withholding tax deducted on your dividends.

Deadline for Form 67: Form 67 must be filed before the due date of the original return (31 July 2026 for AY 2026-27 for non-audit cases). Missing the Form 67 deadline means you forfeit the FTC claim for that year — you will pay full Indian tax on the gross dividend without credit for the US withholding already paid.

Penalties for non-disclosure — the Black Money Act

The penalty regime for Schedule FA non-disclosure is governed by the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (the Black Money Act). This is a separate statute from the Income Tax Act, with significantly harsher provisions.

Penalty under Section 42

Section 42 of the Black Money Act imposes a penalty for failure to furnish information about foreign assets in the return of income:

₹10,00,000 (₹10 lakh) per foreign asset per year of non-disclosure

This is a flat penalty — it does not scale with the value of the asset. A US brokerage account worth ₹50,000 that is not disclosed attracts the same ₹10 lakh penalty as one worth ₹5 crore.

Multiple years of non-disclosure: If you have not disclosed a US brokerage account for three financial years (e.g., FY 2022-23, FY 2023-24, FY 2024-25), the potential penalty is ₹30 lakh — regardless of the account value.

Multiple accounts: If you hold accounts at both Vested and Rovia and fail to disclose both, the penalty could be ₹10 lakh × 2 accounts × number of years = up to ₹60 lakh for a three-year gap across two accounts.

Penalty under Section 41 — undisclosed foreign income

If you also failed to report income from the foreign asset (dividends, interest), Section 41 of the Black Money Act imposes a penalty equal to three times the tax payable on the undisclosed income — in addition to the flat Section 42 penalty.

Prosecution under Sections 49 and 50

Beyond financial penalties, the Black Money Act provides for criminal prosecution:

Provision	Offence	Punishment
Section 49	Wilful failure to disclose a foreign asset	Rigorous imprisonment of 1 to 7 years + fine
Section 50	Wilful attempt to evade tax on foreign assets	Rigorous imprisonment of 3 to 10 years + fine

In practice, prosecution is typically reserved for large undisclosed amounts and cases where there is clear evidence of wilful concealment. Inadvertent omissions by retail investors with small portfolios more commonly result in penalty notices rather than prosecution — but the risk is not zero.

"Omission" vs "concealment"

The Black Money Act distinguishes between:

Omission: Failure to include Schedule FA in an otherwise correct return, or inclusion of incorrect details through oversight
Concealment: Deliberate non-disclosure intended to hide the existence of the asset

Inadvertent omission may attract the Section 42 flat penalty but is less likely to trigger prosecution. Deliberate concealment — especially combined with false statements in the ITR — is treated more severely.

Voluntary Disclosure before detection

The Black Money Act does not have a formal Voluntary Disclosure Scheme (VDS) equivalent to the older VDIS of 1997. However, the following options exist:

Updated Return (ITR-U): Under Section 139(8A) of the Income Tax Act, you can file an Updated Return for up to two assessment years prior to the current year (for AY 2026-27, you can file ITR-U for AY 2025-26 and AY 2024-25). Filing an Updated Return with Schedule FA before a notice is issued is treated more favourably than responding to a notice.
Revised Return: If the original return deadline has not passed (31 July 2026), you can file a revised return under Section 139(5) incorporating Schedule FA at no penalty.
Proactive compliance before detection: If the IT Department has not yet issued a notice and you come forward voluntarily, this is generally treated as a mitigating factor in penalty proceedings. Consult a CA immediately if you have missed Schedule FA for prior years.

What ITR-U cannot fix: ITR-U covers only the most recent two assessment years. If you have undisclosed foreign assets from FY 2021-22 (AY 2022-23) or earlier, ITR-U is not available for those years. In such cases, consult a tax lawyer about the options — which may include a compounding application under FEMA (separate from the Income Tax/Black Money Act proceedings).

GIFT City accounts — an evolving and unsettled area

GIFT City (Gujarat International Finance Tec-City) is India's International Financial Services Centre (IFSC). Several platforms now offer US stock investing through IFSC-regulated brokers:

Dhan has an IFSC entity
Tickertape has an IFSC offering
Raise Financial Services (IFSC) operates in GIFT City
ViewTrade Securities (IFSC) operates in GIFT City
Various IFSC-regulated stock brokers and fund platforms

The critical Schedule FA question: Is a GIFT City brokerage account a "foreign asset" that must be disclosed in Schedule FA?

The argument that GIFT City accounts are NOT foreign assets

GIFT City is physically located in India — in Gandhinagar, Gujarat. The IFSC Special Economic Zone is governed by Indian law (the IFSCA Act, 2019 and the SEZ Act, 2005). The account is with an Indian-regulated entity (IFSCA-licensed). The account holder's money is in India, even if it is denominated in USD.

Under this argument, an IFSC brokerage account is analogous to a foreign-currency account in India (FCNR or RFC) — which is not a "foreign asset" under Schedule FA.

The argument that GIFT City accounts ARE foreign assets requiring disclosure

The securities held in an IFSC account are often US-listed instruments — US equities, US ETFs, US ETF ADRs. The economic exposure is to foreign assets. Some practitioners argue that the beneficial interest in foreign securities — even if held through an IFSC intermediary — is a "capital asset held outside India" under Part D.

Additionally, the IFSCA has explicitly positioned IFSC as an offshore financial hub for regulatory purposes — including FEMA exemptions and tax holidays. This offshore-positioning argument could support treating the assets as foreign for Schedule FA purposes.

Current prudent approach

Until CBDT issues explicit guidance on GIFT City / IFSC accounts and Schedule FA, the prudent and widely-recommended approach is to disclose GIFT City brokerage accounts in Schedule FA under Part D.

The penalty for non-disclosure is ₹10 lakh. The cost of disclosure is zero (other than the time to fill two extra lines in the ITR). The asymmetry makes disclosure the rational choice under uncertainty.

For the address field in Part D when disclosing a GIFT City account, use the registered address of the IFSC entity (typically at GIFT City, Gandhinagar, Gujarat — which you can note as "India/IFSC").

See our complete guide on GIFT City vs LRS — which route to use for US stocks for more detail on the GIFT City regulatory framework.

ETFs held at US brokers — are they separate disclosures?

A common misunderstanding: investors with diversified US portfolios sometimes ask whether each ETF or stock is a separate Schedule FA entry.

No. The brokerage account is the single disclosure entry under Part D — not the individual securities inside it.

If your Vested account holds:

VTI (Vanguard Total Stock Market ETF)
QQQ (Invesco QQQ Trust)
AAPL (Apple Inc.)
AMZN (Amazon.com Inc.)

You make one Part D entry for the Vested/DriveWealth account. The closing balance of the account captures the combined value of all these positions. The income field captures all dividends received across all holdings during the year.

ETF dividends — what counts as income in Schedule FA?

ETFs can pay dividends (quarterly or annual distributions from the underlying stocks). These pass-through dividends must be included in the income accrued field in Schedule FA, even if you reinvest them through a DRIP (Dividend Reinvestment Plan) within the account.

If your ETF automatically reinvests dividends, those reinvested dividends:

Are still reportable as dividend income in Schedule FA (income accrued field)
Are taxable in India as "income from other sources" in Schedule OS
Increase your cost basis in the ETF shares (one more lot of fractional shares)
May have had US withholding tax deducted before reinvestment

Check your broker's 1099-DIV or dividend history report to identify total gross dividends before withholding.

Multiple brokerage accounts — how to handle them

If you invest across multiple platforms — a common pattern for Indian investors who use both a long-term account and an active trading account — you must make separate Part D entries for each account.

Example: Investor with three accounts

Account	Platform	Closing balance (31 March 2026)	Peak balance	Dividends
Account 1	Vested (DriveWealth)	₹4,50,000	₹5,20,000	₹3,200
Account 2	Rovia	₹1,80,000	₹2,10,000	₹900
Account 3	IBKR (direct)	₹12,40,000	₹14,00,000	₹18,500

This investor files three Part D entries in Schedule FA. Each is a separate row in the Part D table. Total foreign assets = three disclosures.

Mutual funds in India that invest in US stocks (like Mirae Asset US Equity Fund, Motilal Oswal NASDAQ 100 FOF): These are Indian mutual funds. They are NOT foreign assets. You do not disclose Indian mutual funds — including US-tracking FOFs — in Schedule FA. These are held with Indian AMCs, regulated by SEBI, and denominated in INR. The investment is domestic.

Missed filings — how to rectify prior years

If you held US stocks in FY 2022-23, FY 2023-24, or FY 2024-25 and did not file Schedule FA, here is the rectification roadmap:

AY 2025-26 (FY 2024-25) — still rectifiable via ITR-U

You can file an Updated Return (ITR-U) under Section 139(8A) incorporating Schedule FA. ITR-U for AY 2025-26 is available until 31 March 2027 (two years from the end of the relevant AY). Filing ITR-U attracts an additional tax of 25% of the incremental tax + interest if filed within 12 months of the AY end, or 50% if filed after 12 months.

For Schedule FA-only corrections with no change in income: If your US portfolio paid no dividends (zero income) and your only omission was the Schedule FA disclosure itself (not any income), you may face the Black Money Act penalty but may not have additional income tax liability. Consult a CA — the penalty calculus is different when the omission did not result in underpaid tax.

AY 2024-25 (FY 2023-24) — ITR-U available until March 2026

If you are reading this before March 2026, you can still file ITR-U for AY 2024-25. After March 2026, this window closes.

AY 2023-24 (FY 2022-23) and earlier — no ITR-U available

For FY 2022-23 and earlier years, the ITR-U window has closed. You cannot file a belated return or an updated return. The only mechanism is:

Wait to see if a notice arrives (risky — notices can arrive years later, penalties compound)
Consult a tax attorney about compounding applications under FEMA and the interaction with the Black Money Act
Voluntary disclosure to the Assessing Officer before a notice is issued — not a formal scheme but can be treated as a mitigating factor

Critical advice: Do not delay. The IT Department has been issuing Section 42 Black Money Act notices to retail investors with small US portfolios. The detection risk is real and growing as India-US FATCA data exchange matures.

Schedule FA and estate tax — a linked consideration

If you hold US stocks (not through a GIFT City / IFSC account), you have US estate tax exposure. The US imposes estate tax on US-situs assets — which includes shares of US-incorporated companies — held by non-US persons at death. The US estate tax exemption for non-US persons is only $60,000 (compared to $13.6 million for US citizens).

Correct Schedule FA disclosure identifies the assets you hold. If your US portfolio exceeds $60,000, you should understand the US estate tax exposure and consider structuring options.

See our complete guide on US estate tax for Indian investors for the full picture.

Schedule FA and LRS — how the IT Department connects the dots

The reason the IT Department is increasingly catching Schedule FA omissions is the data linkage between LRS outflows and ITR filings.

Here is the data flow:

You remit money under LRS → Your AD bank (authorised dealer — HDFC Bank, ICICI Bank, SBI, etc.) reports every LRS transaction to the RBI under FEMA. This data includes your PAN, the amount remitted, the purpose code, and the destination country.
CBDT-RBI data sharing → The RBI shares this LRS data with CBDT (Central Board of Direct Taxes) under the tax authority's information-gathering powers.
FATCA data exchange → India and the United States have a FATCA Inter-Governmental Agreement (IGA). Under this IGA, US financial institutions (your US broker) report accounts held by Indian residents to the US IRS, which then shares this data with the Indian Income Tax Department. This includes account holder PAN/TIN, account balance, and income.
CRS data exchange → Under the OECD Common Reporting Standard, many jurisdictions exchange financial account information. The US participates in FATCA-equivalent exchanges with India.
Automated matching → CBDT's systems match LRS outflow data (from RBI) with FATCA/CRS data (from the US) against ITR Schedule FA disclosures. Mismatches generate automatic notices.

This means: even if you never voluntarily disclosed, the IT Department likely already has your account data from your broker. Schedule FA is not just a compliance formality — it is you telling the government what they probably already know. Filing it correctly avoids the penalty for non-disclosure.

Schedule FA in the context of capital gains — what it does and doesn't do

A frequent misconception: some investors believe that filing Schedule FA satisfies all their tax obligations for US stocks. It does not.

Schedule FA is only a disclosure. Separate from Schedule FA:

Capital gains from selling US stocks

Profits from selling US stocks are taxable in India as capital gains under Section 45 of the Income Tax Act, reported in Schedule CG of ITR-2:

Short-term capital gains (STCG): If the holding period is 24 months or less for listed shares (or 12 months for ETFs — the classification can depend on the type of instrument and the year of assessment). STCG is taxed at your slab rate.
Long-term capital gains (LTCG): If the holding period exceeds 24 months. LTCG on foreign assets is taxed at 12.5% without indexation (post-Budget 2024 changes for AY 2025-26 onwards — verify with your CA for the specific year you are filing).

US stocks held through a non-IFSC broker are treated as unlisted securities for Indian capital gains purposes (because they are listed on US exchanges, not Indian exchanges). The holding period threshold for LTCG is therefore 24 months, not 12 months.

Dividends from US stocks

Dividends received from US stocks are income from other sources, reported in Schedule OS of ITR-2. They are taxed at your applicable slab rate in India.

You can claim credit for US withholding tax (25% or 15% under Article 10 of the US-India DTAA if a residency certificate has been filed) via Schedule FSI and Form 67.

RSU perquisites

If you receive US company stock as RSU vesting, the vesting event is a perquisite under Section 17(2) and is taxed as salary income. This is separate from Schedule FA but related — the RSU shares you hold after vesting must eventually be disclosed in Schedule FA. See our guide on how Vested works for US stock investing from India for more on the platform mechanics.

Quick-reference checklist for AY 2026-27 Schedule FA filing

Use this before you submit your ITR-2:

Frequently asked questions

Is the Schedule FA disclosure confidential?

Schedule FA data is part of your ITR, which is subject to the confidentiality provisions of Section 138 of the Income Tax Act. It is not publicly accessible. However, it can be shared with other government agencies for law enforcement purposes and is used internally by CBDT for cross-matching with FATCA/CRS data.

Do I need to disclose US stocks held in an Indian mutual fund?

No. If you invest in an Indian mutual fund that in turn invests in US stocks (like Motilal Oswal NASDAQ 100 ETF or Mirae Asset NYSE FANG+ ETF), the investment is with an Indian AMC and is a domestic asset. Do not disclose it in Schedule FA.

What if I forgot to mention a small dividend in Schedule FA?

Correct your return via a revised return (before the deadline) or ITR-U. A small inadvertent omission is generally treated as a compliance error rather than concealment, but it is still better to have an accurate return on record. Under the Black Money Act, the penalty is for non-disclosure of the asset, not specifically for omitting income — though incorrect income disclosure increases overall scrutiny risk.

Can a CA sign the ITR for me?

The ITR must be verified by the individual taxpayer. A CA can prepare the return and file it on your behalf using your credentials, but the return must be verified by you — either through Aadhaar OTP, net banking, or by sending the physical signed ITR-V to CPC Bengaluru. The verification is your legal attestation that Schedule FA is complete and accurate.

My US stocks are in my minor child's name — who discloses them?

If a minor child holds foreign assets, the parent or guardian in whose income the child's income is clubbed must disclose those assets in their Schedule FA. The child's assets are treated as the parent's assets for this purpose.

I received RSUs from my US employer. When does the Schedule FA disclosure obligation start?

From the first year in which you receive and retain RSU shares after vesting. If you vest RSU shares in, say, October 2025, hold them in your company's broker account (Morgan Stanley, Fidelity, Schwab), and they are still in the account on 31 March 2026, you must disclose that brokerage account in Schedule FA for FY 2025-26 (AY 2026-27). If you sold all the shares on the day of vesting and transferred the proceeds to India, there may be no balance to disclose — but document this clearly.

Summary

Schedule FA is not optional, not size-dependent, and not forgivable on the grounds of ignorance. If you are a Resident and Ordinarily Resident Indian and you hold a US brokerage account — regardless of its value — you must disclose it in Schedule FA of ITR-2 or ITR-3.

The five things that matter most:

Use the right ITR form. ITR-2 or ITR-3, never ITR-1 or ITR-4.
Disclose the account, not individual stocks. One Part D entry per brokerage account.
Get the peak balance right. It is the highest value during the year, not just the 31 March balance.
Use official exchange rates. FBIL/RBI reference rate or SBI TTBR — not Google Finance.
File Form 67 before 31 July. If you received any dividends, Form 67 is required to claim the US withholding tax credit.

If you missed Schedule FA in prior years, file ITR-U for the years that are still within the two-year window. For earlier years, consult a CA or tax attorney before a notice arrives.

The IT Department has your LRS data. FATCA gives them your account data from the US side. The matching is automated. Voluntary compliance is both legally required and practically rational.

Disclaimer: This article is for educational and informational purposes only and does not constitute tax advice, legal advice, or financial advice. Tax laws and regulations change frequently, and individual circumstances vary. Consult a qualified Chartered Accountant or tax attorney before making any tax filing decisions. The authors and Rovia / Vested Finance are not liable for any tax outcomes based on information contained in this article. Penalty amounts, exchange rates, and form versions cited are based on information available as of July 2026 — verify current figures with official sources (incometax.gov.in, rbi.org.in, fbil.org.in) before filing.