ITR2 Filing with Foreign Assets & Capital Gain | How to fill Schedule FA -Foreign Assets declaration

Summary

This video script offers a comprehensive guide on filing ITR-2 for salaried individuals holding foreign assets. It explains the necessity of declaring foreign assets under the Income Tax Act, despite no additional tax liability, to avoid hefty penalties and imprisonment. The script outlines the eligibility for ITR-2, required documents, and a step-by-step process for filing, including details on schedules for income, deductions, and foreign assets, emphasizing the importance of accurate financial reporting in INR using the Telegraphic Transfer Buying rate.

Takeaways

• 📋 Salaried individuals holding foreign assets must file ITR-2 for declaration, which includes assets like properties, bank accounts, and shares outside India.
• 🤔 Even if foreign shares are part of one's salary and have been taxed, they must still be declared in ITR-2 as per the Income Tax Act.
• 💼 Failure to disclose foreign assets can lead to penalties of 30 to 90% of the asset's value and potential imprisonment of up to 7 years.
• 👤 Individuals or Hindu Undivided Families (HUFs) without business income and those ineligible for ITR-1 should file ITR-2.
• 📑 Required documents for ITR-2 filing include Form 16, 26AS, AIS, investment proof, capital gain loss statement, foreign income and tax documents, and foreign assets information.
• 💹 Foreign assets, whether purchased or sold in 2022, must be declared in Indian Rupees using the Telegraphic Transfer Buying rate.
• 🔍 The ITR-2 filing process involves selecting the appropriate tax schedules based on income sources and deductions, and entering personal and financial details.
• 🏦 Bank account details are necessary for processing any refunds resulting from the ITR-2 filing.
• 📈 Capital gains, both short-term and long-term, must be reported with consolidated or separate data as per the guidelines, using trading account statements.
• 💡 Other source income, such as dividends and interest, should be verified and updated in the ITR-2 filing, including any foreign income received.
• 🌐 The declaration of foreign assets in ITR-2 is crucial and involves providing detailed information about each asset, its acquisition date, value, and any dividends received.

Q & A

What is the purpose of filing ITR-2 for a salaried person holding foreign assets?

ITR-2 is required to be filed for the declaration of foreign assets such as properties, bank accounts, securities, and shares of foreign companies. This is irrespective of whether the individual has already paid tax on the income from these assets, as it is just a declaration and not an additional tax liability.

What are the potential consequences of not disclosing foreign assets in ITR-2?

Failure to disclose foreign assets can result in penalties ranging from 30 to 90% of the value of the foreign assets, along with the possibility of imprisonment for up to 7 years.

Who is required to file ITR-2 according to the script?

Individuals or Hindu Undivided Families (HUFs) who do not have income from business or profession, and those who are not eligible to file ITR-1, are required to file ITR-2.

What documents are needed for filing ITR-2 as mentioned in the script?

The required documents include Form 16, 26AS, AIS, proof of investments, capital gain loss statement, statement and certificate of foreign income, deduction of foreign tax, and information about foreign assets.

How should the value of foreign assets and income be reported in ITR-2?

All values related to foreign assets and income should be reported in Indian Rupees (INR) using the Telegraphic Transfer Buying rate of the respective dates.

What is the significance of the Telegraphic Transfer Buying rate in reporting foreign assets and income?

The Telegraphic Transfer Buying rate is used to convert foreign currency values into INR for the purpose of filing ITR-2, ensuring consistency and accuracy in reporting.

What are the steps to file ITR-2 as outlined in the script?

The steps include logging into the income tax website, selecting the assessment year, choosing the mode of filing, starting a new filing, selecting ITR-2, providing personal and bank details, filling out various schedules based on the individual's income sources and deductions, and finally reviewing and submitting the return.

What is the process for declaring foreign assets in ITR-2?

To declare foreign assets, one must select the type of financial asset, provide details such as country name, name of the entity, address, ZIP code, date of acquisition, initial investment value, peak value during the year, closing value at the end of the year, and any dividend or income received from the asset.

How are capital gains calculated and reported in ITR-2?

Capital gains are calculated based on the difference between the selling price and the purchase price (or fair market value, whichever is higher) of the assets. This information is then reported in the relevant schedules of ITR-2, such as Schedule 111A for short-term capital gains and Schedule 112A for long-term capital gains.

What is the role of the Schedule FA in ITR-2 filing?

Schedule FA is crucial for declaring all foreign assets held or received until the end of the financial year. It requires detailed information about each foreign asset, including its nature, acquisition date, and value in INR.

How should one handle foreign dividend income in ITR-2?

Foreign dividend income should be reported in the Other Sources of Income schedule. It should be noted that such income may be subject to special tax rates as per Double Taxation Avoidance Agreements (DTAA) and the Income Tax Act.