Investing in Foreign Stocks, ETFs, or Crypto? IT Department Issues Strict Disclosure Alert — Non-Compliance Can Cost You Heavily

Indian investors are increasingly looking beyond domestic markets to diversify their wealth. From buying shares in companies like Apple or Tesla to investing in global ETFs and even holding crypto on foreign exchanges — international investments are now easier than ever under India’s Liberalised Remittance Scheme (LRS).

But with these growing cross-border investments comes a big responsibility: strict tax disclosures. The Income Tax Department has issued a clear warning — if you fail to declare your foreign assets and income correctly, you could face heavy penalties, additional tax, and even prosecution under the Black Money Act.

📈 How Much Money Is Going Abroad?

According to recent figures, Indian investors remitted a record $1,699 million overseas under LRS in FY2025 — up 12% from the previous year. This shows the rising appetite for global exposure. While the returns can be rewarding, incomplete or incorrect reporting can bring you under the tax department’s scanner.

📜 Which Foreign Investments Must You Report?

Under the Income Tax Act, 1961, every Resident and Ordinarily Resident (ROR) must declare their foreign assets and foreign source income in detail. Here’s what you must know:

✅ Schedule FA (Foreign Assets)

You must declare:

• Any foreign bank account, whether it’s a savings, depositary, or custodial account.

• Foreign stocks, ETFs, or other securities — e.g., holdings in Interactive Brokers, Vanguard, or other international platforms.

• Overseas properties, trusts, or legal arrangements.

• For each asset, you must disclose:

  • Peak balance during the year

  • Closing balance

  • Any income earned — all converted into INR using SBI’s TTBR exchange rate.

✅ Schedule FSI (Foreign Source Income)

You also need to report any income earned abroad, such as:

• Dividends from foreign shares

• Interest earned in overseas accounts

• Rent from foreign property

• Capital gains on selling foreign assets

Additionally, you must provide:

• The country name

• The Taxpayer Identification Number (TIN) in that country

• If you claim relief under a tax treaty (DTAA), you need to specify the article used.

✅ Schedule TR (Tax Relief)

If you have already paid tax in a foreign country, you may claim relief to avoid double taxation:

• Section 90/90A: Applicable when India has a Double Taxation Avoidance Agreement (DTAA) with that country.

• Section 91: If no DTAA exists, you can claim unilateral relief by submitting Form 67 before filing your ITR.

✅ Schedule VDA (Virtual Digital Assets)

If you trade or hold cryptocurrencies like Bitcoin, Ethereum, or NFTs, you must report:

• The total details of your transactions.

• If your crypto is held in a foreign wallet or exchange, it must be declared under Schedule FA as well.

⚡ What Are the Penalties for Non-Disclosure?

Failure to disclose foreign assets or income is treated very seriously under India’s Black Money Act. Penalties include:

• A fine of up to ₹10 lakh per undisclosed foreign asset.

• A penalty up to three times the tax due on undisclosed income.

• Jail term ranging from 6 months to 7 years.

Don’t think you can hide — India receives data from overseas under CRS (Common Reporting Standard) and FATCA (Foreign Account Tax Compliance Act) agreements. If you try to dodge, the IT department can easily trace your foreign holdings.

⚠️ Why It’s Critical to Disclose Properly

India is now part of the global tax transparency network. The IT department uses data from banks, brokerages, and exchanges abroad to cross-check your ITR. Even a minor mistake in your disclosure can trigger a notice or assessment.

Here’s what you should do:
✔️ Always declare every foreign investment — stocks, ETFs, bank accounts, or crypto holdings.
✔️ Keep track of peak and closing balances, and convert them to INR accurately.
✔️ File Form 67 if you’re claiming foreign tax credits.
✔️ Don’t wait till the last minute — file your ITR well before the due date to fix any errors.

🗂️ Final Words: Invest Globally, Report Responsibly

Investing in global assets can boost your portfolio returns and diversify your risk. But along with rewards comes the responsibility of full compliance.

When in doubt, consult a tax professional. Always check which Schedules apply to you — FA, FSI, TR, and VDA — and report your details honestly. Staying transparent is not just about avoiding penalties; it’s about securing your wealth and peace of mind in a globally connected financial world.

Stay smart, stay compliant, and invest wisely!