Schedule FA (Foreign Assets) in your Indian ITR is one of the most important — and most overlooked — disclosures for Indian freelancers and business owners with international income. Getting it wrong (or skipping it) carries severe penalties under the Black Money Act. This guide covers exactly what to disclose and how.
What Is Schedule FA and Who Must File It
Schedule FA requires Indian tax residents to disclose details of foreign assets held at any point during the financial year. It is part of ITR-2, ITR-3, and ITR-4.
You must file Schedule FA if you held any of the following at any point during the financial year:
- Foreign bank accounts (Wise, Mercury, Revolut Business, any overseas bank)
- Interests in foreign entities (shares in a Delaware LLC, Singapore Pte Ltd, UK Ltd)
- Foreign immovable property
- Foreign financial interest (partnership interests, foreign trust beneficiary)
- Foreign signing authority on an account (even if you don't own it)
- Foreign source income during the year (from international clients) "At any point during the year" means even if you closed the account by March 31. If it existed for one day: disclose.
Common Foreign Assets Indian Service Exporters Hold
Wise Business account: Widely used by Indian freelancers for receiving USD/GBP/EUR. If you held a Wise account with any balance during the year: Schedule FA disclosure required.
Mercury account: US business banking used by some Indian founders with Delaware C Corps. If you hold a Mercury account: Schedule FA required for the Mercury account AND potentially for your ownership interest in the Delaware LLC.
Delaware LLC / Singapore Pte Ltd: If you're a shareholder in a foreign entity: Schedule FA required for the foreign company interest. Also triggers FEMA ODI compliance.
Stripe Atlas account: If Stripe Atlas has set up a US entity for you: your ownership interest in that entity is a foreign asset requiring disclosure.
What to Fill in Schedule FA
Part A: Foreign Bank Accounts
| Field | What to Enter |
|---|---|
| Country name | USA (Wise) / USA (Mercury) / UK (Revolut) |
| Name of institution | Wise Payments / Mercury Bank / etc. |
| Account number | Your Wise/Mercury account number |
| Account opening date | Date you created the account |
| Peak balance during year | Highest balance at any point |
| Closing balance | Balance on March 31 |
| Income earned | Interest or other income from the account |
Part B: Foreign Custodial Accounts
For brokerage accounts holding foreign securities. Less common for service exporters.
Part C: Foreign Equity and Debt Interest
For interests in foreign companies (Delaware LLC shares, etc.).
| Field | What to Enter |
|---|---|
| Country | USA (Delaware) / Singapore / UK |
| Entity name | Your LLC or company name |
| Nature of entity | LLC / Corporation / LLP |
| Date of acquisition | When you got the shares/interest |
| Initial investment | Amount paid for equity |
| Income from entity | Dividends, profit distributions |
Penalties for Non-Disclosure: The Black Money Act
The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 imposes:
- Penalty for non-disclosure: ₹10 lakh per undisclosed foreign asset
- Tax on undisclosed foreign asset: 30% at flat rate
- Additional penalty: 300% of tax owed
- Prosecution: Up to 7 years imprisonment in serious cases The penalty is per asset, not per year. Three undisclosed foreign assets = ₹30 lakh minimum penalty.
This is not theoretical. The Income Tax Department receives FATCA (US) and CRS (global) data from foreign financial institutions. Your Wise account information is shared with Indian tax authorities automatically.
Schedule FA: Common Mistakes
1. Not disclosing a closed Wise account. If you had a Wise account for 6 months and closed it before March 31: still required to disclose.
2. Confusing personal and business accounts. Both personal and business foreign accounts require disclosure.
3. Not disclosing foreign company interest when it was set up by a third party. Stripe Atlas, for example, sets up a Delaware LLC for you. You are the owner. Schedule FA required.
4. Disclosing only year-end balance, not peak balance. Schedule FA asks for PEAK balance during the year, not just closing balance.
FAQ
Does a Wise account need to be disclosed in ITR? Yes. Any foreign bank or payment account held during the financial year must be disclosed in Schedule FA. Wise accounts, Mercury accounts, Revolut Business accounts all qualify.
What is the penalty for not disclosing a foreign account in ITR? Under the Black Money Act: ₹10 lakh per undisclosed foreign asset + 30% tax on the asset value + 300% additional penalty. Serious non-disclosure can result in prosecution.
Does owning a Delaware LLC require Schedule FA disclosure? Yes. Your ownership interest in a foreign entity (Delaware LLC, Singapore Pte Ltd, UK Ltd) is a foreign asset. Disclose in Schedule FA Part C. Also triggers FEMA ODI compliance requirements.
What if I forgot to disclose in previous years? Consult a CA experienced in international taxation immediately. There may be options to file revised returns or approach under disclosure windows. Don't wait.