Own US stocks, a foreign bank account or overseas property? You must file ITR-2 by July 31

If you are a Resident and Ordinarily Resident (ROR) in India and own even a single foreign asset, you cannot file your income tax return using the simplified ITR-1 (Sahaj) form for Assessment Year (AY) 2026-27.

Instead, you will have to file ITR-2. Those who also have income from a business or profession must use ITR-3, as these forms include schedules for reporting foreign assets and overseas income.

CA Abhishek Soni, CEO and Co-founder of Tax2Win, says many taxpayers mistakenly assume that foreign asset disclosure applies only to people with substantial overseas investments.

"If you are a Resident and Ordinarily Resident (ROR) in India and own any foreign asset, you cannot file ITR-1 (Sahaj) for AY 2026-27. Instead, you must file ITR-2 (or ITR-3 if you have business or professional income), as these forms include Schedule FA, where you have to disclose foreign assets."

"This requirement applies even if you own just one foreign asset," Soni said.

• A foreign bank account

• US-listed stocks or ETFs

• ESOPs or RSUs received from a foreign employer

• Overseas mutual funds

• A property located outside India

• Overseas retirement accounts such as a US 401(k)

Besides foreign assets, resident taxpayers may also have to report foreign income and claim relief for taxes paid overseas, where applicable.

"Indian residents owning any form of overseas asset (whether it’s an account, stocks, shares, MFs, properties, power to operate a bank account, etc.) should submit ITR-2 for AY2026-27, regardless of their income. It’s enough to just possess an inactive account from when they stayed in a foreign country a decade back! ITR-1 and ITR-4 does not contain FA Schedule (foreign asset) and if anyone submits them despite owning any foreign asset, their return is considered defective," said CA Siddharth Maurya, Managing Director of Vibhavangal Anukulkara Pvt Ltd

Why ITR-2 is mandatory

• Schedule FA covers Foreign assets

• Schedule FSI covers Foreign source income

• Schedule TR covers Tax relief claimed for taxes paid abroad (along with Form 67, where applicable)

Who else needs to file ITR-2?

ITR-2 isn't meant only for taxpayers with foreign assets. You should also use this form if you:

• Have capital gains that cannot be reported in ITR-1

• Own more than one house property

• Are a director in a company

• Hold unlisted equity shares

• Have total income exceeding ₹50 lakh

• Have signing authority in a foreign bank account

• Need to carry forward losses under the heads "Capital Gains" or "House Property"

What if you don't disclose foreign assets?

The Income Tax Department warns that failing to disclose foreign assets or foreign income can attract penalties and even prosecution under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.

It's also worth noting that overseas assets are not beyond the tax department's reach. India receives financial account information from several jurisdictions under global information-sharing arrangements such as the Common Reporting Standard (CRS) and the Foreign Account Tax Compliance Act (FATCA), making it easier to detect undisclosed foreign holdings.

"Since India is a signatory of CRS and FATCA, exchange of financial information with more than 100 countries is taking place and non-disclosure of overseas asset is getting caught," said CA Siddharth Maurya.

Deadline to file ITR-2

For Resident and Ordinarily Resident individuals required to file ITR-2 because they hold foreign assets or earn foreign income, the due date for AY 2026-27 is July 31, 2026, provided they are not subject to a tax audit.