A S BANKA ADVISORS

If you hold ESOPs in a US parent, run a Robinhood or Interactive Brokers account, kept a salary account open in Dubai, or park a few thousand dollars of crypto on an offshore exchange, here is the uncomfortable news: the Income Tax Department already knew. As of this filing season, so does your Annual Information Statement.

By an order dated 8 July 2026 (F.No. 225/73/2025-ITA-II), the CBDT authorised the Directorate of Income-tax (Systems) to display Automatic Exchange of Information (AEOI) data on foreign accounts and income directly inside a taxpayer’s AIS and Form 26AS. Because this year straddles two statutes, the enabling order runs under Section 119 of the Income-tax Act, 1961 and a parallel order under Section 239 of the Income-tax Act, 2025, its direct successor. The Department is not asking for new data. It is showing you what it already receives, and nudging you by SMS and email to disclose it.

What actually lands in your AIS

The data flows in under two frameworks: the Common Reporting Standard (CRS), through which 100-plus jurisdictions share account information annually, and FATCA, under the India-US inter-governmental agreement. What surfaces: foreign bank accounts, custodial and brokerage accounts, year-end balances, and specified income such as interest and dividends. The AIS currently carries calendar years 2022, 2023 and 2024. Data for calendar year 2025, the year relevant to this filing, is expected once India receives it around September-October 2026.

Treat the AIS as a prompt, not a complete ledger. It nudges; it does not absolve. You remain responsible for anything it misses.

Who has to report, and the returning-NRI trap

Only a person who is Resident and Ordinarily Resident (ROR) must complete Schedule FA, along with Schedule FSI and Schedule TR where relevant, whether or not the foreign income is taxable in India. Non-Residents and RNORs are generally outside this net. The trap sits in the transition: in the first year your status flips to ROR, previously non-reportable foreign accounts suddenly become reportable. This is exactly where returning founders and NRIs get caught, so track the year your residential status changes with care.

The assets founders forget

• ESOPs and RSUs in a foreign parent held by employees of Indian subsidiaries, even when vested value is small.
• Foreign brokerage accounts holding US-listed stocks, with dividend credits.
• Dormant foreign bank accounts from a past stint abroad.
• Crypto on CRS-reporting offshore exchanges.
• Beneficial interests in foreign trusts and holding companies, even where you are not the legal owner.

Why the penalty math is unforgiving

Foreign-asset non-disclosure is not judged under ordinary Income-tax Act penalties. It falls under the Black Money (Undisclosed Foreign Income and Assets) Act, 2015. Under Section 43, failing to disclose a foreign asset, or filing inaccurate particulars, draws a flat Rs 10 lakh penalty for each such year. Section 42 mirrors that for a resident who fails to file the return at all. Undisclosed foreign income or asset value attracts tax at a flat 30% plus a penalty of three times the tax, with prosecution on top for wilful evasion.

There is one relief. From 1 October 2024, the Rs 10 lakh penalty under Sections 42 and 43 does not apply where the aggregate value of foreign assets, other than immovable property, does not exceed Rs 20 lakh in the year. Read that carefully: it shields you from the penalty, it does not remove the duty to disclose the asset in Schedule FA. Use it as a backstop, never as a licence to omit.

The four moves to make before you file

1. Download your AIS and open the foreign-account / AEOI block.
2. List every foreign account and asset you held, then match line by line against your bank and broker statements: peak balance, closing balance, gross income.
3. Complete Schedule FA for each asset using the correct reporting period, plus FSI and TR where foreign tax was paid.
4. Already filed AY 2026-27 without full disclosure? File a revised return now. A voluntary correction is a rounding error next to a Black Money Act proceeding.

The 8 July order removes the last excuse founders used to lean on: “I did not know they had the data.” It now sits in your AIS. If your cap table, compensation or treasury touches anything offshore, this is a two-hour reconciliation that can save a seven-figure penalty.

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Sorting out foreign-asset disclosure for your team or your own holdings? Talk to an Expert. CA Adityavikram Banka, Founder, A S Banka Advisors Private Limited. Book a call: https://calendly.com/asbanka-info/30min