Receiving a money transfer from abroad usually feels like a smooth, routine banking transaction. But when automated tax monitoring systems pick up an international transfer that is missing from a filed tax return, it can quickly turn into an unexpected surprise from the Income Tax Department.
That was the exact situation facing Harikrishnan, a corporate employee, when he received a notice from the tax portal asking him to revise his return for Assessment Year 2025–26 to declare his foreign assets and overseas income.
The trigger was an inward transfer of Rs 1.88 lakh deposited into his Indian bank account in April 2024.
The money came from a foreign share sale executed overseas. While the investor had already filed his original tax return earlier in August using his domestic tax documents, he had accidentally left out the overseas stock sale and its holding details from Schedule FA (Foreign Assets).
The real risks of skipping foreign asset details
Under Indian tax laws, resident individuals holding or selling foreign shares, whether through employee stock options, RSUs, or direct market investments, must make clear annual disclosures in their tax returns.
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Failing to report foreign assets or under-reporting overseas income can lead to severe penalties under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. The law imposes a flat 30% tax alongside heavy monetary fines and potential legal consequences for non-disclosure.
When the tax department’s automated monitoring system flagged the Rs 1.88 lakh transfer against his filed return, ignoring the notice was not an option.
To stay compliant and clear his record, the investor needed to submit a revised return under Section 139(5) before the December 31 deadline.
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Reconstructing multi-currency share transactions
Filing a revised return for foreign stock sales requires much more than simply reporting the net profit in Indian Rupees.
To fix the issue properly, tax experts at ClearTax stepped in to manually reconstruct the entire transaction history of his foreign shares. This involved gathering granular details, including the company’s official name and overseas address, the currency of holding, the original purchase date, initial cost, exact sale date, and final sale proceeds.
Since the stock was sold in foreign currency, every single transaction date required converting historical values into Indian currency using official reference exchange rates.
The calculated capital gains were then added to his tax return, and the foreign stock details were properly disclosed under Schedule FA.
Closing the case before the year-end cutoff
Working against the year-end deadline, the entire multi-currency calculation, capital gains computation, and tax reconciliation were finalized by ClearTax experts on December 31.
The revised return with Schedule FA included was submitted on the official e-filing portal, successfully e-verified, and the compliance issue was officially closed before midnight.
Takeaway for receiving funds from abroad
Inward foreign bank transfers are regularly tracked by financial intelligence systems and cross-matched against income reported in filed tax returns.
If you hold or sell foreign shares as a resident taxpayer, you must fill out Schedule FA in your tax return, no matter how small or large the profit might be.
Responding promptly to communications from the tax portal and filing a revised return before statutory deadlines is the safest way to avoid unnecessary tax demands and protect yourself from heavy non-disclosure penalties.
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(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 twenty-three, twenty twenty-six, at thirty-three minutes past six in the evening.
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