On 25 September 2026, the Income Tax Department began emailing taxpayers whose Annual Information Statement shows overseas accounts or holdings, according to a TaxGuru report on the department's foreign asset emails. For an Indian investor who holds U.S. real estate, the email is a reminder that Schedule FA, the part of the income tax return where residents list every foreign asset, is now read against data the department receives from abroad.
Schedule FA does not create any tax by itself. It is a record, and the department can now compare that record with what foreign institutions report. The way a U.S. property investment is described there therefore matters as much as the tax paid on its income. The U.S. real estate tax guide for Indian investors explains how that income is taxed. This article explains how the holding itself is reported, and what an investor should check before 31 December 2026, when two correction windows close.
What Schedule FA Is and Who Has to File It
Schedule FA appears only in ITR-2 and ITR-3. It applies to individuals and Hindu Undivided Families who are resident and ordinarily resident in India for the year. A resident who holds any foreign asset must file a return under the fourth proviso to section 139(1), even when total income is below the basic exemption limit. Residents who are not ordinarily resident, and non-residents, do not fill it for that year.
The schedule follows the calendar year, not the Indian financial year. The return for 2025-26, filed in 2026, covers foreign assets held at any point between 1 January and 31 December 2025. An investor who remitted money under the Liberalised Remittance Scheme for U.S. real estate in February 2026 will therefore report that holding for the first time in the return that covers calendar year 2026. A holding sold during the year is still reported, and so is one that paid no income.
Why Foreign Asset Data in the AIS Changes the Picture
On 8 July 2026, the Central Board of Direct Taxes authorised the display of information received under automatic exchange agreements in each taxpayer's Annual Information Statement. A CBDT office memorandum dated 17 July 2026 states that data for calendar years 2022, 2023 and 2024 is already visible, and that data for 2025 is expected in September or October 2026. The information comes from the Common Reporting Standard, under which more than 100 jurisdictions share account data, and from the U.S. FATCA agreement with India.
The same note warns that this data may not be a complete record. Taxpayers are still required to report all foreign assets and foreign income in Schedule FA and Schedule FSI, whatever the AIS shows. In practice, an interest in a private U.S. property entity may not appear in the AIS at all, for example where it is not held through a reportable bank or custody account. Its absence from the AIS is not a reason to leave it out of the return.
The September emails made the link explicit. According to the TaxGuru report, the department described the message as an advisory rather than a legal notice, and pointed recipients to a new disclosure scheme where foreign assets had not been reported in Schedule FA.
How a U.S. Property Investment Shows Up in Schedule FA
The answer depends on what the investor actually owns. Indian investors in U.S. commercial real estate usually invest through a U.S. corporation, often called a blocker, which holds the interest in the property and typically issues Form 1042-S each year. The investor owns shares in that corporation, not the building. For this reason the holding usually belongs in the table for foreign equity and debt interest, not the table for foreign immovable property. A separate article explains how a real estate SPV holds U.S. property, and the investor's CA confirms the right table from the offering documents.
Each entry asks for the initial value of the investment, the peak value during the calendar year, the closing value on 31 December and the income accrued. Values are converted into rupees at the State Bank of India telegraphic transfer buying rate under Rule 115. Because a private holding has no market price, the peak and closing values depend on statements from the sponsor or the platform. Investors should keep every year-end statement for this reason.
Distributions from the blocker are usually dividends. They are reported in Schedule FSI as well, and any U.S. tax withheld may be claimed as a foreign tax credit by filing Form 67 under the India-U.S. Double Taxation Avoidance Agreement (DTAA). The rules on that credit are covered in the article on how U.S. dividend tax applies to property distributions.
The Two Correction Windows That Close on 31 December 2026
The first window is the revised return. The return for 2025-26 can be revised without a fee until 31 December 2026. After that, a revision filed by 31 March 2027 attracts a fee under section 234I of ₹1,000 where income is up to ₹5 lakh and ₹5,000 above that. A revised return is the ordinary route when a foreign holding was simply left out of Schedule FA.
The second window is the Foreign Assets of Small Taxpayers Disclosure Scheme, 2026, set out in the Finance Act, 2026. It was notified on 14 August 2026, opened on 16 August 2026 and accepts declarations until 31 December 2026. It has two categories. Undisclosed foreign assets and income with an aggregate value of up to ₹1 crore are charged tax at 30% plus an equal additional amount. Foreign assets bought from income earned as a non-resident or already taxed in India, but not reported, are covered up to ₹5 crore for a flat fee of ₹1 lakh. A valid declaration gives immunity under the Black Money Act, 2015.
Which route fits, if either, depends on facts that only the investor and their CA can judge. These include residential status in each year, the source of the money and whether the income was already taxed in India.
Risks and Limits of Getting Schedule FA Wrong
The cost of an omission can be large. Under section 43 of the Black Money Act, a resident who fails to report a foreign asset in the return can face a penalty of ₹10 lakh for each year. Foreign income that was never disclosed is taxed at 30%, with a penalty equal to three times that tax. These provisions apply to the reporting failure, whatever the size of the investment's income.
Correct reporting also has limits. It does not change the risks of the investment itself, which include loss of capital, illiquidity, falling property values, tenants leaving, distributions not being paid, leverage and refinancing, and currency movements. A weaker rupee raises the rupee values reported in Schedule FA without any change in the property, and a stronger rupee lowers them. Values for a private holding are estimates supplied by the sponsor, and the investor cannot verify them against a market price.
What to Check Before the Next Return
Accurate entries in Schedule FA depend on records gathered across the whole calendar year. Before the next return, an investor holding U.S. real estate should collect the following.
- Residential status for the year, since only residents who are ordinarily resident fill Schedule FA
- Every remittance made under LRS during the calendar year, with the Form A2 and bank advice for each
- The TCS credit in Form 26AS, since TCS is nil up to ₹10 lakh in a financial year and 20% on the excess for investment remittances
- Statements showing the value at purchase, the highest value in the year and the value on 31 December
- Form 1042-S and the record of each distribution received
- The Foreign Assets Information section of the AIS, compared line by line with the Schedule FA entries before filing
Schedule FA as the Record That Has to Match
The department's emails, the new AIS data and the disclosure scheme point in one direction. For years, Schedule FA depended almost entirely on what taxpayers chose to declare. It is now one side of a comparison, and the other side arrives from foreign tax authorities every year.
For an Indian investor in U.S. real estate, the practical effect is narrow but real. The holding is usually shares in a U.S. corporation, reported on a calendar year, at values supplied by the sponsor, with dividends flowing into Schedule FSI and Form 67. The U.S. real estate tax guide for Indian investors sets out the tax that follows from that structure, and the investor's own CA remains responsible for the return. Eligible investors can review how investing in U.S. real estate from India works on Raveum, including the property, sponsor, ownership structure, fees, risks and offering documents for each opportunity.
Frequently asked questions
Who needs to fill Schedule FA in the income tax return?
Schedule FA must be filled by individuals and HUFs who are resident and ordinarily resident in India and held any foreign asset during the calendar year. This includes foreign bank accounts, shares in foreign companies and foreign property. It appears only in ITR-2 and ITR-3, so a person with foreign assets cannot use ITR-1 or ITR-4.
Do NRIs have to report foreign assets in Schedule FA?
No. Non-residents and residents who are not ordinarily resident do not fill Schedule FA for that year. The obligation starts in the first year a person becomes resident and ordinarily resident. Returning NRIs should check their status for each year carefully, because assets bought abroad while non-resident must be reported once that status changes.
Which period does Schedule FA cover?
Schedule FA covers the calendar year from 1 January to 31 December, not the Indian financial year. The return for 2025-26, filed in 2026, reports foreign assets held at any time during calendar year 2025. A U.S. investment made in early 2026 is therefore reported for the first time in the following year's return.
How are shares in a U.S. company reported in Schedule FA?
Shares in a U.S. company usually go in the table for foreign equity and debt interest. The entry shows the initial value, the peak value during the calendar year, the closing value on 31 December and income accrued, converted at the State Bank of India telegraphic transfer buying rate. Dividends are also reported in Schedule FSI.
What is the penalty for not reporting foreign assets in the ITR?
Under section 43 of the Black Money Act, 2015, failing to report a foreign asset in the return can attract a penalty of ₹10 lakh for each year. Undisclosed foreign income can be taxed at 30% with a further penalty equal to three times the tax. The investment's own risks, including loss of capital, remain separate.
Can you revise your return to add Schedule FA?
Yes. The return for 2025-26 can be revised without a fee until 31 December 2026, and with a fee under section 234I until 31 March 2027. Where an older foreign asset was never declared, the disclosure scheme open until 31 December 2026 may be relevant, and a CA should assess which route applies.
This article is for general education only and is not investment, tax or legal advice. Rules change and depend on individual circumstances. Investing in private real estate involves risk, including loss of capital, illiquidity, falling property values, distributions not being paid and currency movements. Participation is limited to non-U.S. persons under SEC Regulation S and verified U.S. accredited investors under Regulation D Rule 506(c), and offerings on Raveum are not open to the general public.
