#declare foreign assets in itr2

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Introduction:-

As the world becomes more interconnected, individuals often find themselves managing assets in different countries. While diversifying investments globally can be beneficial, it also introduces additional complexities when it comes to filing your Income-Tax Return (ITR). This article aims to shed light on the tax implications of foreign assets and provide guidance on navigating the ITR filing process in such cases.

Taxation of Foreign Assets:-

1.Residential Status and Tax Liability:

Your residential status plays a crucial role in determining how your foreign assets are taxed in India. The Indian tax system distinguishes between residents and non-residents, each subject to different tax rules.

2. Income from Foreign Assets:

Income generated from foreign assets, such as rental income from property or dividends from foreign investments, must be declared in your ITR. This includes interest earned on foreign bank accounts and gains from the sale of foreign investments.

3. Foreign Bank Accounts:

Foreign bank accounts, including savings and fixed deposits, must be disclosed in your ITR, even if they do not generate any income. This ensures compliance with the Foreign Exchange Management Act (FEMA).

4. Foreign Property Ownership:

If you own property abroad, you are required to report it in your ITR. Additionally, you must account for any rental income, property taxes, and potential capital gains.

5. Foreign Investments:

Income from investments like stocks, bonds, and mutual funds held overseas is taxable in India. It's essential to report these assets accurately, including details of dividends and capital gains.

Claiming Tax Relief:-

1. Double Taxation Avoidance Agreements (DTAA):

India has entered into DTAA with many countries to prevent the same income from being taxed twice. Under DTAA, you may be able to claim tax credits or exemptions for foreign taxes paid.

2. Foreign Tax Credits:

If you've paid taxes on your foreign income in the country where it was earned, you can claim a credit for those taxes while filing your ITR in India. This helps avoid double taxation.

ITR Filing Process for Foreign Assets:-

1.Choose the Correct ITR Form:

Depending on the nature and extent of your foreign assets, select the appropriate ITR form. For instance, ITR-2 may be applicable for individuals with foreign income.

2. Provide Comprehensive Information:

Ensure all relevant details about your foreign assets, including income earned and taxes paid abroad, are accurately recorded in the ITR form.

3. Attach Required Documents:

Supporting documents such as foreign tax returns, bank statements, property ownership documents, and investment statements should be attached with your ITR.

4. Report Foreign Assets Separately:

Use the relevant sections in the ITR form to report foreign assets. Provide specific details about each asset, including its location, value, and income generated.

Conclusion:-

Effectively managing and reporting foreign assets in your Income-Tax Return is crucial for maintaining compliance with Indian tax laws. Understanding the tax implications and following the correct ITR filing process can help you navigate this complex terrain with confidence. By adhering to the guidelines provided in this article, you can ensure that your ITR accurately reflects your global financial position while minimizing the risk of any penalties or legal issues.

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INCOME TAX RETURN FORMS, ITR, TAX SLAB FOR AY 2019-20

Who can fill ITR 1? ITR 1 Sahaj form Ay 2019-20.

Salary or Pensioner.

Income from one house property(excluding cases where the loss is brought forward from previous years)

No business income / no Capital gains

No asset in a foreign country or no income from a source outside India

Agricultural  income which is less than Rs 5,000

Income from other sources like FD/Shares/NSC etc.,

No income from lottery or horse racing.ITR Form-1 (Sahaj) can be filed by an individual who is resident other than not ordinarily resident and has income up to Rs 50 lakh. Also, the individual should not receive income from salary, one house property / other income (interest, etc.).

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Who

can

not

use ITR 1 Form

? Income Tax Return Forms ITR 1.

If your total income for the assessment year 2019-20 exceeds Rs.50 lakh.

Income from more than one house property.

Next Income from winnings from lottery or income from Racehorses;

Income tax under section 115BBDA.

Income of nature referred to in section 115BBE.

Also, Income under the head “Capital Gains”.

Agricultural income in excess of Rs.5,000.

Income from Business or Profession.

Loss under the head ‘Income from other sources’.

A person claiming relief under section 90 and/or 91.

Any resident has any asset (including financial interest in any entity) located outside India or signing authority in any account located outside India.

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Who

can

fill

ITR 1

? ITR 2 for Ay 2019-20.

Income Tax Return Forms ITR 2.

An Individual or HUF can file ITR2 Form. You can use this form if you have;

Salary or Pension Income

Income under the head ‘Capital Gains’

Income from multiple houses

No business / professional income under any proprietorship

An asset in a foreign country or income from a source outside India

Agricultural income of more than Rs 5,000

Income from lottery or horse racing

If your income is more than Rs 50 Lakh, ITR 2 has a Schedule AL requiring assesses to declare their assets and liabilities at the end of the fiscal.

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Who

can

fill

ITR

3?

Income Tax Return Forms ITR 3.

New ITR 3 form is for individuals and HUFs.

Who has income from a proprietary business or profession(or having income as a partner in a Partnership firm)

This ITR covers all kind of businesses and professions irrespective of any income limit.

Assesses also report his income from salary, multiple house properties, lottery winnings, capital gains, speculative income i.e. horse race in ITR3 along with with the Business gain.

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Who

can

fill

ITR

4?

Income Tax Return Forms ITR 4.

An individual can use this form who has,

For Individuals, HUFs and Firms (other than LLP) being a resident having total income up to Rs.50 lakh and having income from business and profession.

No Capital Gains.

Agricultural Income which is less than Rs 5k.

No asset in a foreign country or no income from a source outside India.

Income from one house property.

How do I file my ITR-1 Form?

You can submit ITR-1 Form either in online or offline mode.

Offline

Mode

:

Only the following persons have the option to file the return in paper form

An individual at the age of 80 years or more at any time during the previous year

An individual or HUF whose income does not exceed Rs 5 lakhs. Also, who has not claimed any refund in the return of income

Online/Electronically

Mode

:

The return is by online mode https://www.incometaxindiaefiling.gov.in/home.

By transmitting the data electronically and then submitting the verification of the return in the form of ITR-V to CPC, Bengaluru.

By filing the return online and e-verifying the ITR-V through net banking/Aadhar OTP/EVC.

If you submit your ITR-1 Form electronically, the acknowledgement will sent to your registered email id. Also, you can choose to download it manually from the income tax website.

Then you sign it and send it to the Income Tax Department’s CPC office in Bangalore within 120 days of e-filing. Alternatively, you can e-verify your return online.

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Changes in Income Tax Return Forms for AY 2019-20.

ITR 1 form for FY 2018-19 is not applicable to an individual who is a director of a company or has invested in unlisted equity shares.

Under Part A, ‘Pensioners’ checkbox is introduced under the ‘Nature of employment’ section.

A return filed under section has been segregated between normal filing and filed in response to notices.

Deductions under salary will be bifurcated into standard deduction, entertainment allowance and professional tax.

The taxpayers will be required to provide income wise detailed information under the ‘Income from other sources’.

A separate column is introduced under ‘Income from other sources’ for deduction u/s 57(iia) – in case of family pension income.

‘Deemed to be let out property’ option now available under ‘Income from house property’.

Section 80TTB column has included for senior citizens.

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What p

oints to consider before filing

Income Tax Return Forms

for AY 2019-20 (FY 2018-19)

?

Consider standard deduction of Rs 40,000 in lieu of travel, medical expense reimbursement and other allowances only for salaried employees and pensioners.

Earlier there was 3% Cess as 2% for primary education Cess and 1% for secondary and higher education Cess for AY 2018-19 (FY 2017-18). However, for AY 2019-20, 4% Health and Education Cess is in ITR filing.

Senior Citizen who has the Interest income earning on Fixed Deposits and Recurring Deposits (e Banks / Post office schemes) is eligible for the exemption up to Rs 50,000. This deduction comes under new Section 80TTB.

The limit under section 80DDB increased to Rs 1 lakh towards medical expenses, for treatment of Critical Illnesses.

80TTA offers deductions on interest income earned from savings bank deposit of up to Rs 10,000. From FY 2018-19, this benefit will not be available if you file the IT return lately.

Earlier the LTCG on equity and Equity Mutual Fund was exempted. LTCG tax at 10% on gains of above Rs 1 lakh from Equities and Equity Mutual Funds is to show in applicable ITR form.

Additional details for Residential Status (in ITR 2 and ITR 3) to report for AY 2019-20.

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What is Tax Slab for 2018 19? What is the Income Tax Slab for AY 2019 20?

The income tax slabs & rates are as below,

Individual resident aged below 60 years.

Senior Citizen ( Individual resident who is of the age of 60 years or more but below 80 years of age at any time during the previous year).

Super Senior Citizen( Individual resident who is of the age of 80 years or more at any time during the previous year).

Which ITR file for salaried person for Ay 2019-20?

IRT 1 Sahaj form to fill by a salaried person.