Most people who invest through US brokerages get Schedule FA wrong in one of three ways. They report on a 1 April to 31 March basis. They net off buys and sells into a single line. Or they report the dividend in Schedule FA and forget to also offer it to tax under "Income from Other Sources." Any one of these can trigger a Black Money Act notice, where the penalty starts at ₹10 lakh per year of non-disclosure — regardless of the value of the asset. This is not a small compliance item to gloss over.

Who has to file Schedule FA

Schedule FA applies only to a Resident and Ordinarily Resident (ROR) taxpayer. If you are an NRI or an RNOR for the year, you do not file Schedule FA at all. But the moment you become ROR — typically after two consecutive years of tax residency post-return — every foreign holding you own, including a dormant brokerage account with $50 in it, must be disclosed.

The calendar year rule — the single biggest mistake

For AY 2026-27, Schedule FA is filed for the calendar year ending 31 December 2025, not the financial year 2025-26. This is a hangover from how most foreign tax jurisdictions report, and it is written into the schedule itself. So if you bought Apple stock in February 2026, that entry does not go in the ITR you file this year — it goes into next year's return. Everything you held or transacted between 1 January 2025 and 31 December 2025 is what you report now.

Currency conversion — SBI TT buying rate, transaction-date-wise

Every rupee value you enter must be converted using the SBI Telegraphic Transfer (TT) buying rate on the respective transaction date. Not the year-end rate, not an average, not the rate on 31 March. If you bought shares on 15 March 2025, you use the SBI TT buying rate of 15 March 2025 for that acquisition cost. For the peak value during the period, you use the rate on the date the peak was hit. Historical TT rates are available from third-party archives like officialforexrates.com, since SBI does not maintain a public archive.

A worked example — how the numbers actually look

Suppose during calendar year 2025 you held the following through a US brokerage account:

This translates into two separate tables in Schedule FA.

Table A3 — Foreign Equity and Debt Interest. Each security is a separate line. No consolidation.

Notice that MNC Inc. was acquired in 2023 but continues to be reported every calendar year it is held, and in the year of sale, the closing value becomes Nil and sale proceeds are populated.

Table A2 — Foreign Custodial Accounts. The brokerage account itself is a custodial account and must be reported separately, even though the underlying securities are in A3.

The A2 disclosure captures the account-level flow; A3 captures each security. Both are required.

The double-reporting rule everyone misses

The $20 dividend and the $2,300 capital gain do not stop at Schedule FA. They must also be offered to tax in the return itself — dividend under "Income from Other Sources" and the gain under "Capital Gains." Schedule FA is a disclosure schedule, not a taxing schedule. Foreign tax credit for US withholding on the dividend is claimed separately in Schedule FSI and Schedule TR, along with Form 67 filed on or before the due date of the return.

What happens if you skip it

Non-disclosure of a foreign asset is not treated as a routine ITR error. It falls under Section 43 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, which prescribes a flat penalty of ₹10 lakh for each year of non-disclosure, on top of any tax on undisclosed income. Prosecution provisions can also apply for wilful non-disclosure. There is no de minimis — a $200 balance in a Robinhood account carries the same disclosure obligation as a $2 million portfolio.

One clear action

Before you file for AY 2026-27, pull your US brokerage statement for the full calendar year 2025 (not FY 2025-26), list every security you held even for a single day, and note the acquisition date, peak date, closing date, and every dividend and sale. Convert each figure at the SBI TT buying rate of that specific date. If the account was opened in an earlier year, carry forward the disclosure — it does not lapse until the account is closed.

This article is for general guidance only and does not constitute professional advice. Please consult a qualified professional before filing your Income Tax Return.

CA Praneeth Thunuguntla | Thunuguntla & Associates | Income Tax & GST Advisory