Many taxpayers across India are receiving an Income Tax Department email/SMS stating that foreign assets or income data has been received from US authorities, but Schedule FA was not reported in the Income Tax Return.
This communication has caused confusion, panic, and misinformation. Some believe it is a scam, while others fear immediate penalties.
Here’s the truth:
This is a genuine system-generated compliance alert, and it must be handled carefully but calmly.
This article explains who is receiving this email, why it is sent, what the law says, what actions are required, and how NRIs should deal with it.
If you are unsure about reporting overseas bank accounts or investments, this detailed article on foreign assets disclosure in ITR explains the rules and compliance in depth
Income Tax Email Content: What the Department Is Communicating
Taxpayers are receiving an email similar to the following:
This is a system-generated communication. Please do not reply to this email.
Data has been shared by the USA authorities showing that you held or earned foreign assets or income (e.g., bank accounts, interest, dividends, investments) during Calendar Year 2024. However, Schedule Foreign Assets was not included in your ITR for Assessment Year 2025–26.
Please revise your ITR by 31st December to report these foreign assets or income to ensure that your return is complete and accurate.
This email is usually followed by an SMS alert asking the taxpayer to log in to www.incometax.gov.in and revise the return.
Is This Income Tax Email Genuine or Fake?
This email is genuine.
It is generated based on international financial data-sharing agreements, mainly:
- FATCA (Foreign Account Tax Compliance Act)
- CRS (Common Reporting Standard)
Under these frameworks, countries like the USA share financial data of Indian taxpayers with the Indian Income Tax Department.
Why Is the Income Tax Department Sending This Email?
The department has identified a mismatch between foreign data received and the ITR filed.
Specifically:
- Foreign bank accounts or investments existed during Calendar Year 2024
- But Schedule FA (Foreign Assets) was not filled in the ITR for AY 2025–26
This is an early compliance warning, not a penalty notice.
Who Is Receiving This Email?
You may receive this email if any of the following apply:
1. You Held a Foreign Bank Account
Even if:
- The balance was small
- The account was rarely used
- The account was opened years ago
If it existed during the year, it is reportable.
2. You Invested in US Stocks or Mutual Funds
This includes:
- US brokerage accounts
- RSUs / ESOPs from foreign employers
- Dividends credited abroad
Many salaried professionals miss reporting this.
3. You Worked Abroad Earlier and Returned to India
Old foreign accounts and investments still require reporting after returning to India, depending on residential status.
4. You Are an NRI or Recently Changed Residential Status
Several NRIs are receiving this email because:
- Residential status was incorrectly selected in ITR
- Schedule FA was skipped assuming NRIs are exempt
This is a very common trigger.
If you are an NRI or have recently returned to India, it is important to understand your tax position. You may refer to our detailed guide on NRI taxation in India for clarity on residential status and reporting obligations.
5. You Earned Any Foreign Income
Examples:
- Interest on foreign bank accounts
- Dividends from foreign shares
- Capital gains on overseas investments
Even if tax was paid abroad, reporting is mandatory.
Legal Requirement: What the Income Tax Act Says
Section 139(1) – Mandatory Disclosure
Every person required to file a return must fully and truly disclose all income and assets, including foreign assets, if applicable.
Schedule FA – Foreign Assets Reporting
Schedule FA is part of the ITR and requires disclosure of:
- Foreign bank accounts
- Financial interest in any entity
- Foreign securities
- Immovable property abroad
- Trusts and other foreign interests
This is a disclosure requirement, not merely a tax computation.
Section 90 & 91 – DTAA Relief
Even if income is taxable abroad and relief is available under DTAA, reporting is still compulsory.
Black Money Act, 2015 (Risk Area)
Non-disclosure of foreign assets by a resident can, in serious cases, attract proceedings under the Black Money Act.
That is why the department issues this alert before moving further.
What Should You Do After Receiving This Email?
Step 1: Check Your Residential Status Carefully
This is the most important step.
Determine whether you were:
- Resident
- Resident but Not Ordinarily Resident (RNOR)
- Non-Resident (NRI)
Residential status depends on number of days stayed in India, not passport or visa alone.
Step 2: Verify Whether You Had Any Foreign Assets or Income
Check:
- Foreign bank statements
- Brokerage accounts
- RSU / stock award statements
- Dividend and interest credits
Dormant accounts are also reportable.
Step 3: Review Your Filed ITR
Specifically check:
- Was Schedule FA filled?
- Were all accounts and investments disclosed?
- Was residential status selected correctly?
Step 4: Revise or Update Your ITR
- File a Revised Return if time limit permits
- Otherwise, file an Updated Return under Section 139(8A)
Correcting this voluntarily significantly reduces future risk.
What If You Are an NRI?
This is where most confusion arises.
Key Rule:
- Non-Residents are NOT required to file Schedule FA
- Residents and RNORs ARE required
If an NRI receives this email:
- Re-check residential status selected in the ITR
- Ensure it matches actual stay in India
Many alerts are triggered due to incorrect status selection.
What If Tax Was Already Paid Abroad?
Tax payment abroad does not remove disclosure obligation.
Even if:
- Tax is deducted in the USA
- Income is exempt under DTAA
- No additional tax is payable in India
Schedule FA must still be filled.
Common Mistakes Leading to This Email
- Assuming small foreign balances don’t matter
- Ignoring old foreign bank accounts
- Confusing NRI status with reporting exemption
- Not reporting RSUs and foreign dividends
- Selecting residential status casually
- Relying only on Form 16 or AIS
Frequently Asked Questions (FAQs)
Is this a notice under Income Tax Act?
No. This is a system-generated compliance alert, not a statutory notice.
Will there be a penalty if I revise now?
Voluntary correction greatly reduces penalty exposure.
Do I need to visit the Income Tax office?
No. This can be handled entirely online.
Should I reply to the email?
No. The email clearly states do not reply. Action must be taken on the portal.
What if I truly have no foreign assets?
Then residential status and data mismatch should be reviewed professionally.
Final Thoughts: Don’t Ignore This Alert
The Income Tax Department now works on global financial data, not assumptions.
This email is an opportunity to correct, not a punishment.
Handled properly:
- No litigation
- No harassment
- No long-term risk
Ignored or mishandled:
- Notices
- Scrutiny
- Possible penalties
If you’ve received this email, get your facts checked and act decisively.