The accounting period for foreign assets
Live MintIt is mandatory for every individual, who qualifies as “Resident and Ordinarily Resident” of India, to file income-tax return if the person has any asset located outside India or is a signing authority in any account overseas. Interestingly, schedule FA follows the “accounting period” concept instead of financial year. The above difference between the accounting period and financial year can lead to a mismatch of assets reported and income taxed in the ITR. For instance, any foreign asset acquired and held, say, in May 2021, will need to be reported in the ITR for financial year 2021-22. Although the asset acquired in January 2022 may not require reporting in the financial year 2021-22, the income earned from such asset during financial year 2021-22 will have to be reported.