How to Report 401(k), IRA and Foreign Pensions in an Indian ITR

Most people worry about paying tax on their 401(k). That is the wrong thing to worry about first.

The bigger exposure is not reporting it at all.

Failure to disclose a foreign asset sits under the Black Money (Undisclosed Foreign Income and Assets) Act, 2015. That is a separate statute from the income tax law. Its penalties do not depend on whether any tax was actually payable.

You can owe nothing and still be exposed.

The CBDT has run repeated compliance campaigns on exactly this. Thousands of taxpayers have received messages about it. The pattern is simple. A foreign account showed up in information exchange, but not in their return.

At Belong, we work with people who did nothing wrong except leave a schedule blank. This guide is about filling it correctly.

Two different questions, two different answers

Every returning NRI conflates these. Separate them and the rest gets easier.

Question one: do I owe tax on this?

That depends on residential status, the relief you have elected, and treaty position.

Question two: do I have to report it?

That depends almost entirely on residential status, and very little on anything else.

You can answer "no" to the first and "yes" to the second. That combination is where most trouble sits.

👉 Tip: Deferral of tax is not deferral of disclosure. They are governed by different provisions.

What your residential status actually triggers

The transition from RNOR to ordinarily resident is the single riskiest moment in a returning NRI's tax life.

Nothing announces it. No letter arrives. Your day counts simply cross a line and your obligations change completely.

Work out your residential status for each year before you touch any schedule.

Which schedule does what

Four different parts of the return do four different jobs. Using the wrong one is itself a reporting defect.

The foreign tax credit form was Form 67 under the old rules. Under the Income Tax Rules, 2026 it is renumbered as Form No. 44. Check the portal, because renumbering has caused genuine confusion this year.

Our note on investment tax credits covers how credit works in principle.

Schedule FA: the part people get wrong

Three features of Schedule FA catch returning NRIs repeatedly.

There is no minimum threshold.

A dormant account with a tiny balance is reportable. So is an account you closed during the year.

It follows the calendar year, not the financial year.

This trips up almost everyone. Your Indian return runs April to March. Schedule FA does not.

It covers ownership, not income.

An account that earned nothing still gets reported. Beneficial interests and joint holdings count too.

For a 401(k) or an IRA, that means pulling calendar-year statements from your plan administrator. Not the April-to-March figures your Indian accountant will instinctively ask for.

You will typically need the opening or acquisition date and the peak balance for the period. The closing balance and income credited are also required.

Do not estimate. Do not round for convenience. Do not merge two accounts into one line because the balances are small.

Our detailed guide on reporting foreign assets in NRI tax filing walks through the schedule structure.

👉 Tip: Ask your plan administrator for a calendar-year statement in writing. Most will produce one on request.

The wrong ITR form is itself a failure

This one is quiet and expensive.

ITR-1 does not contain Schedule FA. If you hold a foreign asset and file ITR-1, you have not just made a form error.

You have filed a return that structurally could not disclose what you were required to disclose.

Most returning NRIs with foreign retirement accounts will need ITR-2 at minimum. Those with business or professional income go further. Our comparison of ITR-2 versus ITR-3 helps you choose.

If you have several income streams, read our note on filing with multiple income sources.

Account by account: how each one behaves

Notice the pattern in the right column. Schedule FA appears in almost every row.

The tax treatment varies. The disclosure obligation barely does.

A rollover IRA deserves its own mention. People treat it as a continuation of the old plan and report one account. It is a separate account with its own number and its own opening date.

Where the income actually lands

Assume you are ordinarily resident and have not elected the timing relief.

Income accruing inside the account is generally taxable in India as it accrues. It flows into your income schedules by head, then into Schedule FSI as foreign source income.

If the foreign country also taxed it, Schedule TR and the credit form carry your relief claim.

If you have elected the relief under Section 89A, now Section 158, the timing changes. The income enters your Indian totals in the year the notified country taxes it.

The disclosure in Schedule FA continues either way. Every year. Without exception.

Treaty positions matter here too. Our guides on claiming DTAA benefits and common DTAA claim mistakes are worth reading before you fill Schedule TR.

Dividends and interest inside a foreign account behave differently from the same income earned in India. Head of income drives which schedule they land in.

The currency layer

Every figure you report has to be converted to rupees.

Rule 115 governs the conversion and specifies different dates for different heads of income. Pick the prescribed rate, document your method, and apply it consistently across years.

There is a second effect people miss. A weakening rupee means the same dollar balance reports as a larger rupee number each year.

Your Schedule FA figures can rise steadily even if you never add a cent. This is separate from inflation eroding what the money buys. That is currency appreciation working against you on paper.

It does not create tax by itself. It does draw attention, so make sure the underlying working is clean.

Reporting runs in both directions

Are you a US citizen or green card holder living in India? Then you have obligations flowing the other way too.

Indian accounts feed into FBAR and FATCA reporting in the US. Our guides on FBAR and whether US NRIs must report Indian bank accounts cover the basics.

FATCA rules for NRIs in the US explains what gets shared automatically.

Indian mutual funds carry particular complexity on a US return. Start with reporting Indian mutual funds on a US tax return.

The two systems talk to each other. Automatic exchange of information means your Indian return and your US filings are read side by side.

Inconsistency between them is what generates queries.

What happens if you ignore this

The escalation is predictable.

Stage one.

Information about your foreign account reaches the department through automatic exchange. Nothing happens visibly.

Stage two.

A mismatch surfaces between what was received and what you filed. Your annual information statement may show it.

Stage three.

A compliance message arrives by SMS or email, asking you to revise.

Stage four.

If unaddressed, proceedings can move to the Black Money Act. Penalties there are levied per year and do not depend on tax being due.

Stage three is a gift. Most people treat it as spam.

Check your AIS before filing every year. If something does not match, our guide on AIS mismatches sets out how to respond.

Our list of common NRI tax filing mistakes covers the wider pattern.

If you have already missed years

This is worth knowing about, because the position changed recently.

Budget 2026 announced a disclosure scheme for taxpayers who failed to report foreign assets or income in earlier returns. It is aimed at small and genuine cases, not large-scale evasion.

Broadly, it offers a time-bound window to declare and pay a prescribed amount. In return comes immunity from penalty and prosecution under the Black Money Act.

Two cautions before you rely on this.

The scheme comes into force on a date to be notified by the Central Government. Confirm whether the window is actually open before planning around it.

Eligibility depends on asset type and value thresholds. Published summaries have quoted different figures. Read the official notification, not a blog summary.

If you think this applies to you, speak to a chartered accountant now rather than after the window closes.

The liquidity trap behind all of this

Here is the pattern we keep seeing, and it is not really a compliance story.

Someone returns to India with a large dollar retirement account and very little accessible savings outside it. Every rupee they can reach is tied to an account with a penalty attached.

Then the tax on accrual arrives, or a professional fee, or a family emergency. The present value of that shortfall is what hurts.

Breaking into a retirement account to fund that is the most expensive money you will ever touch. The account is a long-term liability magnet when used as short-term cash.

The fix is boring and effective. Build a separate, accessible dollar layer before you land.

GIFT City works well for this because it keeps that layer in dollars, inside India, with clear repatriation. You are not forced to convert everything to rupees on arrival.

Start with our GIFT City mutual funds tool to see what is available. The mutual fund products page explains access.

Two funds to look at closely are the DSP Global Equity Fund and the Tata India Dynamic Equity Fund.

Two more sit alongside them. Consider the Edelweiss Greater China Equity Fund and the Sundaram India Mid Cap Fund.

For the stable portion, compare deposits on our NRI FD rates explorer. Terms move, so check current offers directly.

Larger portfolios sometimes add GIFT City alternative investment funds. Minimums are higher and exit is slower.

For listed exposure with a defined entry, GIFT City IPOs are a live route. The IPO products page has the mechanics.

If you are phasing money into Indian equity after returning, the GIFT Nifty tracker shows pre-market direction.

One clarity point. GIFT City investments are Indian investments. They are not foreign assets, so they do not go into Schedule FA.

For resident Indians who never worked abroad

Be clear on what applies to you.

If you hold no foreign asset, Schedule FA is not your concern. Nothing here changes your filing.

But two situations catch resident Indians out more often than they expect.

Foreign stock awards.

RSUs, ESOPs and ESPPs from a multinational employer are foreign assets. They are reportable even when unsold and even when they earned nothing.

Overseas brokerage accounts.

Investments made abroad under the liberalised remittance route are foreign assets too.

If either applies, you are in Schedule FA territory. Treat it seriously.

Where you want global diversification without foreign-asset reporting, GIFT City funds are the cleaner route. They give dollar exposure while remaining Indian investments, which keeps your equity exposure simple to report.

Decision clarity

If you are non-resident or RNOR, confirm the position, then check whether any exception applies to you.

If you are ordinarily resident with any foreign account, Schedule FA applies. There is no small-balance exemption.

If you file ITR-1 and hold foreign assets, change your form before you file anything else.

If your plan statements run April to March, request calendar-year statements instead.

If you hold a rollover IRA, report it as a separate account with its own dates.

If a compliance message has arrived, respond within the stated window. Do not wait for a formal notice.

If you missed earlier years, check whether the disclosure scheme window has been notified and whether you qualify.

If your rupee liquidity on landing is thin, build the accessible layer first. The retirement account is not an emergency fund.

👉 Tip: Report the asset every year you are ordinarily resident, regardless of income, relief or balance.

A case worth learning from

A doctor returned from Manchester after twelve years. Careful, organised, hired a good accountant in Pune.

She disclosed her UK pension income properly. Her accountant filled Schedule FSI and claimed treaty relief correctly.

Schedule FA was left blank for the pension, because the accountant treated it as income already reported.

It was not the same thing. The asset needed separate disclosure, in its own schedule, on a calendar-year basis.

Nothing was hidden. No tax was short. The exposure came purely from a blank schedule.

She fixed it through a revised return. It cost her fees and three months of worry that were entirely avoidable.

Ask your accountant directly whether they have filled Schedule FA for a foreign retirement account before. Our note on using a CA versus filing yourself helps frame that conversation.

FAQs

Do I report my 401(k) even if I withdrew nothing?

Yes, if you are resident and ordinarily resident. Schedule FA reports the asset, not the income.

Does electing Section 89A relief remove the reporting duty?

No. The relief changes when income is taxed. Disclosure of the asset continues every year.

Which period does Schedule FA cover?

The calendar year, not the Indian financial year. Request statements accordingly from your plan administrator.

Is there a minimum balance below which I can skip an account?

No. There is no threshold. Dormant, closed and joint accounts are all reportable.

Can I file ITR-1 if I hold a foreign pension?

No. ITR-1 has no Schedule FA. Most people in this position will need ITR-2 or higher.

Do GIFT City investments go in Schedule FA?

No. GIFT City is within India, so those holdings are Indian assets, not foreign assets.

What if I already missed several years?

A disclosure scheme announced in Budget 2026 may help. Confirm whether the window is notified and open.

Do RSUs from a foreign employer count?

Yes. Foreign stock awards are foreign assets and are reportable even if unsold.

Sources

• Income Tax Department, Schedule FA, FSI and TR guidance on foreign assets and income: https://www.incometax.gov.in

• Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015: https://www.incometaxindia.gov.in/black-money-undisclosed-foreign-income-and-assets-and-imposition-of-tax-act-2015

• CBDT compliance-cum-awareness campaigns on Schedule FA reporting

• Income-tax Act, 2025 and Income Tax Rules, 2026, effective 1 April 2026

• Finance Bill, 2026, introducing the Foreign Assets of Small Taxpayers Disclosure Scheme

• Rule 115, Income-tax Rules, on conversion of foreign currency income

Schedules, form numbers, thresholds and scheme windows change. Confirm the current position on the income tax portal before you file.

Disclaimer

This guide is general information, not personalised tax advice. Foreign asset reporting depends on your specific facts and residential status.

Please consult a qualified chartered accountant before filing. Investments carry market risk. Read all scheme documents before investing.