Foreign Income — Reporting, DTAA & Schedule FA
Resident and Ordinarily Resident (ROR) individuals are taxed on worldwide income; Non-Ordinarily Resident (RNOR) and NRIs are taxed only on India-source income. Schedule FA disclosure of foreign assets (bank, shares, immovable, insurance) is mandatory — non-disclosure attracts Black Money Act (₹10L penalty + prosecution).
- ROR: taxed on worldwide income
- RNOR / NRI: only India-source income
- Schedule FA mandatory for all foreign assets
- DTAA relief: exemption method or credit method (Form 67)
- Form 67 must be filed before ITR to claim FTC
Definition
Foreign Income
What is Foreign Income?
Resident and Ordinarily Resident (ROR) individuals are taxed on worldwide income; Non-Ordinarily Resident (RNOR) and NRIs are taxed only on India-source income. Schedule FA disclosure of foreign assets (bank, shares, immovable, insurance) is mandatory — non-disclosure attracts Black Money Act (₹10L penalty + prosecution).
Key rules to remember
- ROR: taxed on worldwide income
- RNOR / NRI: only India-source income
- Schedule FA mandatory for all foreign assets
- DTAA relief: exemption method or credit method (Form 67)
- Form 67 must be filed before ITR to claim FTC
Worked example
A Bengaluru ROR with US RSU worth ₹8L vested + ₹42k dividend from US: pays US tax ₹1.2L, claims FTC via Form 67, and pays balance India tax at slab.
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