Filing an income tax return for foreign assets is complex enough when all broker statements are readily available.
But what happens when an investor logs into their overseas trading account on the eve of the filing deadline, only to find that their shares have vanished and broker statements are completely inaccessible?
That was the high-stakes situation facing Ankit, a corporate professional, on December 30, just 36 hours before the statutory cutoff for filing belated and revised returns for Assessment Year 2025-26.
While attempting to reconcile his global investments, including active holdings on domestic platforms and cryptocurrency trades, he encountered a major roadblock with his older US stock portfolio held on E\*TRADE.
The shares had been transferred to US state custody as unclaimed property due to prolonged account inactivity, leaving no downloadable capital gains or holding statements on the portal.
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With the tax department enforcing strict compliance for foreign assets, skipping the holdings was not an option.
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Why foreign shares must still be disclosed in the ITR
Under Indian tax laws, salaried individuals holding foreign equity, whether through stock purchase plans, RSUs, or direct investments, are required to make detailed annual disclosures in Schedule FA (Foreign Assets) of their Income Tax Return.
Failing to declare foreign assets or under-reporting overseas holdings can attract severe penalties under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, which carries a flat 30% tax alongside heavy monetary fines and potential prosecution.
For Ankit, the difficulty was that E\*TRADE had turned off standard reporting features once the assets were transferred to state custody.
Standard tax filing software and automated upload tools rely on broker-generated statements to populate Schedule FA, which requires exact details including peak holding values, initial investment cost, acquisition dates, and dividend income.
Without an official statement from the broker, the investor was unable to auto-generate the required tax schedules as the December 31 deadline approached.
How tax experts reconstructed the missing investment records
To resolve the issue without violating mandatory disclosure rules, tax experts at ClearTax had to manually reconstruct the entire transaction trail for the transferred shares.
By reviewing historical purchase confirmations, bank transfer logs, and employer equity statements, the team established the company name, total cost of investment, initial acquisition dates, and historical exchange rates for the holdings.
This allowed the required entries under Schedule FA to be entered manually, ensuring full transparency with the Income Tax Department despite the absence of an automated broker feed.
Alongside the inactive stock holdings, the tax team also consolidated his active US stock portfolio, aggregating capital gains, foreign source income, and dividend distribution reports.
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Crypto trades added another layer of tax complexity
The foreign stock disclosure was not the only complex layer in the return. The investor’s portfolio also included active cryptocurrency trading across multiple digital asset exchanges.
Under Section 115BBH of the Income Tax Act, gains from Virtual Digital Assets are taxed at a flat rate of 30%, plus applicable surcharge and cess, with no deduction allowed for expenses other than the cost of acquisition. Furthermore, losses from crypto trading cannot be set off against gains from any other income head or carried forward.
To ensure accurate computation, trade histories were processed through a specialized crypto tax software to generate a consolidated report, reconciling buy-sell transactions and computing the net crypto tax liability.
US dividend tax: How the investor claimed Foreign Tax Credit
In addition, because tax had been withheld in the US on dividends under Form 1042-S, the taxpayer was eligible to claim Foreign Tax Credit under Section 90/91 to prevent double taxation.
Crucially, Indian tax rules mandate that Form 67, the statement for claiming foreign tax credit, must be submitted on the Income Tax e-filing portal before or along with the filing of the return. Working against the clock on December 30, Form 67 was successfully uploaded and verified on the official portal.
With the Foreign Tax Credit legally secured, the complete ITR computation, combining salary, reconstructed foreign equity in Schedule FA, 30% crypto tax, and Schedule AL (Assets and Liabilities), was finalized.
The revised return was submitted and acknowledged at 7:09 PM on December 30, and successfully e-verified, bringing a complex multi-asset compliance race to a successful close.
What investors should learn from this case?
Accounts that remain inactive for extended periods in overseas brokerages may be transferred to state custody as unclaimed property. Even if statements are unavailable, taxpayers remain legally obligated to report the initial cost and acquisition details in Schedule FA.
Submitting Form 67 on the income tax portal on or before filing the return is equally vital. Omitting Form 67 can result in the tax department disallowing Foreign Tax Credit, leading to unexpected tax demands on foreign income.
Reconciling foreign assets, overseas tax credits, and crypto transactions well before year-end deadlines prevents last-minute filing bottlenecks and avoids severe non-disclosure penalties under the Black Money Act.
(The author is the founder and CEO of ClearTax)
Disclaimer: The views expressed in this article are solely those of the author and do not reflect the official policy, editorial position or views of Financial Express. The article is intended for informational purposes only and should not be construed as tax, legal or financial advice.
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This article was first uploaded on October sixteen, twenty twenty-six, at twenty-one minutes past two in the afternoon.
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