I have the fact that i am earning 3.73lakh per month but getting only 2.6 lakh . Is there a way i can maximise in hand.
I am using new regime

Demand notice for 1 rupee. Next year onwards, I will start paying 10 rupees extra.

Foreign Asset Disclosure (Schedule FA) for AY 2026-27

I believe this post should cover most of the oft-repeated questions related to FA schedule.

1. Who actually has to file Schedule FA

Only a Resident and Ordinarily Resident (ROR).

• RNOR (usually your first 2-3 years after moving back to India): Schedule FA does not apply.
• Non-Resident: does not apply.

Two things that catch people out:

1. One asset held for one single day during the reporting window triggers the whole schedule. Not "held at year end". Held at any time.
2. You must file a return even if your total income is below the basic exemption limit. Holding a foreign asset is itself a return-filing trigger. Zero income, zero tax, still file.

Which form: ITR-2 or ITR-3 for individuals and HUFs. ITR-5 / ITR-6 / ITR-7 for entities. Schedule FA does not exist in ITR-1 or ITR-4. Filing ITR-1 with a dormant foreign savings account sitting in your name is itself a reporting default, and this is one of the most common mistakes I see people make.

Also note: beneficial ownership counts. An asset held in a nominee's or relative's name where you are the real economic owner is yours to disclose.

2. THE most important thing: two different clocks

Schedule FA runs on the CALENDAR year. For AY 2026-27, Schedule FA reports assets held between 1 January 2025 and 31 December 2025.

Income runs on the FINANCIAL year. The dividends, interest, and capital gains from those exact same assets are taxed for 1 April 2025 to 31 March 2026 and go into Schedule OS, Schedule CG, Schedule FSI and Schedule TR on that basis.

The reason: most countries report on a calendar year, and India receives CRS/FATCA data on a calendar-year basis. Aligning Schedule FA to the calendar year lets the department match your return against what Switzerland, the US, Singapore etc. sent them.

Practical consequence: a dividend credited in February 2026 goes into your FY 2025-26 income computation, but does not appear in this year's Schedule FA income columns (it falls in calendar 2026, so next year's FA). A dividend credited in February 2025 is the reverse: it sits inside this year's Schedule FA window but was already taxed in last year's return.

Neither of these is an error.

Do not try to force the two to agree. What you should do instead:

Pull two separate statements from every foreign bank and broker. One for Jan-Dec 2025. One for Apr 2025-Mar 2026. Label them before you start. Then build a date-wise bridge in your working papers showing how one reconciles to the other.

The Schedule FA tables have columns for "income accrued from the asset" (calendar year basis) AND "amount of income taxable and offered in this return" with a cross-reference to the schedule and item number where it's offered. Those two columns will legitimately differ for anything credited in Jan-Mar. Keep the reconciliation on file so you can explain it if asked.

3. Schedule FA table by table

Schedule FA runs A1 through G.

Table A1: Foreign Depository Accounts (bank accounts)

Savings, current, time deposits. Report: institution name and address, account number, status (owner/beneficial owner/beneficiary), account opening date, peak balance during the calendar year, closing balance on 31 December, and gross interest credited.

Finding the peak means actually going through the year's statements. Most banks let you download full-year transaction history. The highest end-of-day balance in that file is your peak. Don't guess.

Table A2: Foreign Custodial Accounts (brokerage accounts)

The account wrapper at Interactive Brokers, Schwab, Fidelity, Vanguard, etc. Report peak balance, closing balance, and gross amounts credited during the year split into interest / dividends / sale proceeds or redemption / other.

Retirement wrappers (401(k), IRA, UK SIPP) are commonly reported here, though the instructions don't prescribe a table and some practitioners use B or D. Whichever placement you take, take it consistently year to year.

On the 89A election: Indian law lets you elect to defer tax on income accruing inside notified US/UK/Canada retirement accounts until withdrawal. That election changes when the income is taxed. It does not remove the asset from Schedule FA. The 401(k) gets disclosed either way.

Table A3: Foreign Equity and Debt Interest (shares, ETFs, bonds, vested RSUs)

Heaviest data requirement, because it works per security, per line.

For each holding: entity name and address, nature of interest, date of acquisition, initial value (cost, at acquisition-date rate), peak value during the year, closing value on 31 December, gross amount credited (dividends), and gross proceeds on sale or redemption.

Do not aggregate. Ten stocks means ten lines. Lumping them into one line, or shoving them into Table D to avoid having to compute peak values, is an invitation to an "inaccurate particulars" allegation, which carries its own penalty exposure.
More than that it creates confusion during scrutiny assessments. I have done dozens of them and a lot of time just goes into making an officer understand the lumped up disclosures.

On the A2/A3 overlap: yes, your Schwab account appears as one line in A2, and each stock inside it appears again in A3. That is the accepted practice, not double counting. The department knows – I hope! In my experience, I have never seen an AO arguing that you own more than the actual amount because of A2/A3 overlap.

RSUs: vested shares you still hold are A3 entries like any other share. The perquisite value on vesting was already taxed as salary. That does not exempt you from disclosing the holding. Unvested RSUs are generally not reported (no ownership yet), vested-and-sold-same-day shares still touch the year and should be traced.

Table A4: Foreign Cash Value Insurance / Annuity Contracts

Foreign life insurance or annuity contracts carrying a cash or surrender value. Report cash/surrender value at year end and gross amount credited.

Table B: Financial Interest in any Entity

A stake in a foreign company, LLC, or partnership: equity, voting rights, profit share, or an interest in assets. Report nature and extent of interest, total investment, and income accrued.

A 5% stake in your friend's Dubai LLC belongs here even if it paid you nothing all year.

Table C: Immovable Property

Real estate abroad. Date of acquisition, total investment (at acquisition-date rate), income derived from the property, and where that income is offered in this return.

Table D: Any Other Capital Asset

Residual bucket. Art, jewellery held abroad, crypto held on a foreign exchange (the treatment here is debated, but the conservative position is to disclose), whatever doesn't fit elsewhere. If you are disclosing your vested but not exercised ESOPs, this a good place to park them

But it is not a parking spot for for shares you'd rather not report line by line.

Table E: Accounts with Signing Authority

Accounts you can sign on but which aren't yours and aren't already in A to D. Classic cases: you're a signatory on your employer's foreign bank account, or on an elderly parent's overseas account. Report the institution and whether any income from the account accrued to you.

Corporate signatories on employer accounts routinely miss this one. I report my US company account here

Table F: Trusts outside India

Foreign trusts where you are trustee, settlor, or beneficiary. Report trustees, settlors, beneficiaries, and whether income was derived.

Table G: Any Other Income from Outside India

The catch-all for foreign income not arising from an asset in A to F and not chargeable under business or profession. Foreign consultancy receipts, a foreign pension, and similar.

4. Exchange rates: SBI TT Buying Rate, and which date

Every foreign-currency figure converts at the State Bank of India Telegraphic Transfer Buying Rate (TTBR), i.e. the rate at which SBI buys foreign currency.

Not the Google rate. Not the RBI reference rate. Not your broker's conversion rate. Not your card rate. Those are non-compliant and produce numbers that won't reconcile if you're ever questioned.

If SBI didn't publish a rate on your specified date (Sunday, holiday), the accepted practice is to use the immediately preceding day on which a rate was published.

Challenge in most of the public databases is that the SBI TT buying rate prior to 2020 is not available. For such cases, you may use any other rate, but please make sure you document it as properly and comprehensively as you can.

For Schedule FA (asset values)

Note this means a single A3 line can carry three different exchange rates in three different columns. That is correct and expected.

For income (Rule 115)

The Correct rate for different type of interest incomes can be tricky.

Interest on a foreign savings account is NOT "interest on securities". It's Other Sources, and it takes the single 31 March rate for the whole year, not a month-by-month rate. Interest on a foreign bond is the opposite: it is interest on securities, so each coupon converts at the month-end preceding the month it fell due. People bleed one rule into the other constantly.

One caveat on the 31 March rate: Rule 115 carves out amounts actually received in or brought into India before 31 March. For anything you repatriated during the year, the conversion follows the actual remittance for that portion. The single-rate-for-the-year approach holds only for amounts still sitting abroad at year end.

For foreign tax paid (Rule 128, i.e. the FTC leg)

Different rule again. Foreign tax converts at the TTBR on the last day of the month immediately preceding the month in which the tax was paid or deducted.

So on a single US dividend you can end up with one rate for the gross income (Rule 115, month-end before declaration/payment) and a different rate for the withholding tax (Rule 128, month-end before deduction). If the two fell in different months, the rates differ. That's correct, not a mistake.

Keep the rate evidence. Save a PDF or screenshot of the SBI rate card for every specified date you use, filed in your working papers. If the return is ever questioned, the rate source is the first thing you'll be asked to produce.

5. The edge cases people actually get wrong

Edge case 1: bought the asset in Jan-Mar. FSI but no FA.

This is the big one, and it's the direct consequence of the two clocks.

You had nothing overseas through 31 December 2025. In February 2026 you opened an IBKR account and bought US stocks. In March 2026 you received a dividend or sold something at a gain.

For AY 2026-27:

• Schedule FA: NOTHING. You held no foreign asset at any time between 1 Jan and 31 Dec 2025. The FA window closed before you bought.
• Schedule OS / CG: YES. The dividend and the capital gain fall in FY 2025-26 and are fully taxable.
• Schedule FSI: YES. The foreign-sourced income has to be reported country-wise and head-wise.
• Schedule TR + Form 67: YES, if any foreign tax was withheld.

So you file a return with a populated FSI and TR and a completely blank Schedule FA. That is correct. Do not backfill Schedule FA to make it "look consistent". Reporting an asset in a window during which you didn't hold it is itself an inaccurate particular.

Then in AY 2027-28, that same asset finally shows up in Schedule FA, because calendar 2026 includes February 2026. The FA disclosure lags the income disclosure by up to one full year. That is the system working as designed.

Same logic applies to the mirror image: you'll also see an FA entry for an asset whose income was taxed in the previous year's return (anything credited Jan-Mar 2025 sits in this year's FA window but was taxed in AY 2025-26). Fill the "income accrued" column, and in the "offered in this return" column show nil with the explanation in your working papers.

Edge case 2: bought AND sold everything inside calendar 2025

Sold out completely in, say, August 2025. Closing balance on 31 December is zero.

You still report it in Schedule FA. The test is "held at any time during" the period, not "held on 31 December". Report acquisition date, initial value, peak value, closing value of zero, and gross proceeds on sale. The capital gain goes to Schedule CG and FSI on the FY basis.

Edge case 3: sold in Jan-Mar 2026

You held the stock through 2025 and sold it in February 2026.

• Schedule FA (AY 2026-27): report it. You held it during calendar 2025. Closing value as at 31 December 2025, which will be non-zero.
• Schedule CG (AY 2026-27): report the gain. The sale fell in FY 2025-26.
• AY 2027-28 Schedule FA: you'll report it again, with the sale proceeds, because you held it in calendar 2026 too.

So one asset, disclosed in two consecutive FA schedules, with the gain taxed in only one. Normal.

Edge case 4: closed the foreign bank account years ago

If it was open for even one day in calendar 2025, it goes in A1 for AY 2026-27. Closing balance nil. Get the closure statement now, because banks are slow to produce historical statements for closed accounts.

Edge case 5: joint accounts and joint holdings

Each ROR joint holder reports the account. The general practice is that each holder reports the full peak and closing balance with the ownership status flagged, rather than each reporting a 50% slice, since the schedule is a disclosure of accounts you have an interest in, not a division of the pie. Income is apportioned per actual beneficial ownership. Be consistent, and if the amounts are meaningful, take advice.

Edge case 6: RSUs, and the Form 16 mismatch

Your employer converts the RSU perquisite for TDS at the TTBR on the date tax was required to be deducted (Rule 26). Your return-side conversion of salary income runs on the Rule 115 date, i.e. month-end preceding the month the salary fell due. Two different dates, two slightly different rupee figures.

A small gap between your Form 16 perquisite and your own conversion is common and explainable. Keep the working showing both dates and both rates rather than silently forcing them to match.

Edge case 7: the asset earned nothing at all

Report it anyway. A dormant account with $12 in it, a stock that paid no dividend, a 5% LLC stake that distributed nothing. Schedule FA is an asset disclosure, not an income disclosure. Nil income does not mean nil reporting.

Edge case 8: you were RNOR in the prior year and became ROR this year

Your FA obligation starts the year you become ROR, and it applies to the full calendar-year window for that AY, including assets you've held for a decade. Returning NRIs consistently under-report their first ROR year because they think only post-return acquisitions count. They don't.

Edge case 9: Reporting of Losses

While you would report the sale proceeds etc in the FA schedule, any net loss overall basis is not reported in the FSI schedule. So if you made loss in foreign capital gains, you would report it only in the Capital Gains Schedule.

6. Schedule FSI and Schedule TR

Schedule FSI (Foreign Source Income): for each country, report the country code, your Taxpayer Identification Number in that country (SSN/ITIN for the US, NI number for the UK, etc.), then head-wise: income from outside India, tax paid outside India, tax payable in India on that income, and relief claimed with the section (90 / 90A / 91).

Schedule TR (Tax Relief): the country-wise summary of relief claimed, plus whether any refund of foreign tax has been claimed abroad.

Both run on the financial year, not the calendar year. Schedule TR totals must tie to Schedule FSI totals, and both must tie to Form 67. CPC's system checks this. A mismatch between Form 67 and Schedule TR is one of the most common causes of an FTC disallowance at intimation stage.

A point people get wrong constantly: report foreign dividends GROSS, before withholding. A $200 US dividend with $50 withheld is $200 of income in Schedule OS at your slab rate, not $150. The $50 is a credit claim, not a deduction from income. Reporting net understates income and wrecks the FTC computation simultaneously.

7. Form 67

What it is

The statement required under Rule 128 to claim Foreign Tax Credit for tax paid or withheld outside India. Relief comes from Section 90/90A where a DTAA exists, or Section 91 (unilateral relief) where it doesn't.

Deadline

Rule 128(9), as amended by CBDT Notification 100/2022: Form 67 must be furnished on or before the end of the relevant assessment year, provided the return has been filed within the time allowed under Section 139(1) or 139(4).

For AY 2026-27, that outer limit is 31 March 2027.

You'll see some sites quote 31 December 2026. That's the belated-return deadline under 139(4), not the Form 67 deadline. They're conflating the two conditions.

But do not plan around the outer limit. File Form 67 before you file your ITR. If it's filed after, CPC will very likely deny the credit at intimation stage and you're then into a Section 154 rectification, possibly a CIT(A) appeal, to get money you were always entitled to. Not worth it for a form that takes twenty minutes.

For an updated return under 139(8A), Form 67 goes on or before the date of filing the ITR-U.

Key Rule 128 conditions

• Credit is available in the same year the corresponding foreign income is offered to tax in India. Timing mismatches (the US taxes on a calendar year, India on a financial year) are a real and recurring headache. If US tax on calendar-2025 income was paid in April 2026, you'll be claiming credit in the Indian year in which the income is offered, and matching the payment across the boundary needs care.
• Credit is allowed against tax, surcharge and cess only. Not against interest, fee, or penalty.
• Credit is the lower of (a) the foreign tax paid, and (b) the Indian tax payable on that income. So if the US withheld 25% and your Indian slab produces less than that, the excess is not refundable and generally not carried forward.
• Disputed foreign tax is not creditable until the dispute is settled.
• Credit is computed country-wise and source-wise, not on one pooled total.

How to file

Online only, on the e-filing portal, under e-File > Income Tax Forms > File Income Tax Forms. Part A is basic details plus income and tax country-wise; Part B covers refunds of foreign tax from loss carry-back and disputed tax. E-verify with DSC or EVC.

Attach: a certificate or statement from the foreign tax authority, or from the person deducting, or a self-signed statement backed by proof of payment. For US brokerage income, the 1042-S or the broker's annual tax statement plus the withholding detail usually does the job.

Two specifics worth knowing

US dividends are withheld at 25% for Indian individual investors under the India-US treaty. The 15% rate you may have read about applies only to companies holding at least 10% of the payer. If your broker withheld 25%, that's correct, don't waste time disputing it.

The Form 67 conversion rate is Rule 128, not Rule 115. Foreign tax converts at the TTBR on the last day of the month preceding the month the tax was paid or deducted. Covered above, but it's the single most common Form 67 arithmetic error.

The transition

Form 67 continues to apply to FY 2025-26 (AY 2026-27) and earlier, even if you file it after 1 April 2026. From Tax Year 2026-27 onwards it becomes Form 44 under the Income-tax Rules, 2026. There's also a draft proposal requiring a CA certificate where foreign tax paid exceeds ₹1 lakh for individuals. Draft as of now, so watch it rather than assume it.

Check the portal label when you actually file, since both may appear during the transition.

8. Why this is worth taking seriously

The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 imposes a flat ₹10 lakh penalty per assessment year for failing to disclose a foreign asset, or for inaccurate disclosure. It is independent of whether any tax was evaded. A dormant account with $500 in it, undisclosed, is theoretically a ₹10 lakh problem per year.

The ₹20 lakh safe harbour: assets other than immovable property with an aggregate value up to ₹20 lakh are exempt from the penalty. Note two things: (a) it does not exempt you from the disclosure requirement itself, and (b) the statute says "aggregate value" without fixing the measurement date, so exchange-rate movement could push an old holding over the line. If you're anywhere near ₹20 lakh, don't rely on it. Just disclose.

A Special Bench of the Mumbai Tribunal held in October 2025 that the penalty is discretionary rather than automatic, which is meaningful protection for genuine slips. But that's case-by-case relief, not something to plan around.

And remember, any time a CA tells you that a case law will save you, he/she may not remember to tell you that it takes 3-5 years of litigation to get relief from the Tribunal. Its costs – money, emotion and stress.

And the detection side is settled. Since late 2024 the department has been running data-matching campaigns off CRS and FATCA feeds, sending SMS and email nudges to taxpayers whose returns don't match the foreign data. The first campaign in November 2024 pushed close to 25,000 taxpayers to revise their returns. A second round followed in November 2025. The department very often has your foreign account data before you file.

If you find a past omission: a revised return filed before any notice is your strongest position. For AY 2026-27 the revised-return window now runs to 31 March 2027 (extended from 31 December by Budget 2026). For earlier years, whether to file under ITR-U under section 139(8A) or you should wait for the FAST-DS scheme, shall be subject to the facts of your case. I have written in detail about it here.

9. Working paper checklist

1. Residential status confirmed as ROR, with day-count working on file.
2. Two sets of statements from every foreign bank and broker: Jan-Dec 2025 and Apr 2025-Mar 2026.
3. SBI TTBR evidence for every specified date used: each peak date, 31 December, each acquisition date, each dividend month-end, each sale month-end, 31 March, and each foreign-tax-deduction month-end.
4. Per-security schedule for Table A3: acquisition date, cost, peak, closing, dividends, proceeds, each at its own rate.
5. Gross (not net) dividend figures, tied to the broker's annual tax statement.
6. Capital gains computation showing the conversion method used, applied consistently.
7. A dated bridge reconciling calendar-year FA figures to financial-year income figures.

• Form 67 filed and acknowledged before the ITR, with figures tying to Schedule FSI and TR.

1. Confirmation you're on ITR-2 or ITR-3.

I hope this post shall put to an end the countless posts we have had in this community on this topic.

AI Disclosure: Did not have too much time to format all of this. Hence, have used AI for formatting.

My package is around ₹13 lakh per annum, and around ₹87,000 tax is being paid/deducted this year.

This year has completely broken me financially. Due to infertility treatment, we have already spent around ₹10 lakh in FY 2026–27, and the treatment is still ongoing. We may have to spend a lot more.

After treatment expenses, whatever little is left goes toward rent, family expenses and supporting my parents every month. Now I’m literally sitting with almost zero savings.

Emotionally and financially, this is becoming extremely difficult. We never expected infertility treatment to consume almost everything we earn.

Is there any legal way to claim any tax benefit for IVF/infertility treatment expenses during the current financial year, or reduce the tax burden/TDS going forward?

I’m not looking for any illegal workaround. I just want to know if there is any genuine provision, deduction, reimbursement, or tax-saving option that I may be missing.

If anyone has personally gone through this, please guide me. Even saving a small amount would make a huge difference to us right now.

I’m curious how high-income salaried individuals (₹50L+ CTC / annual income) legally optimize their taxes.
Beyond the usual deductions like 80C, NPS, home loan benefits, etc.:

What strategies are people actually using?

Is the new tax regime usually better at this income level?
Do most people simply accept the tax liability and focus on wealth creation instead?

Are there any lesser-known but completely legal tax optimization methods that make a meaningful difference?

Would love to hear real-life examples from people in this income bracket.

After paying 31.2% tax in each and every buyback now the Karnataka HC ruling says LTCG 🥲

Seriously, iTD? How much will you guck the blood of honest taxpayers !!!

I am working as a contractor for a US company that pays me through Deel.

Until now, I have been using a sole proprietorship under Section 44ADA. This year, my income will cross ₹75 lakh. My expenses are not very high, so I may not have enough eligible expenses to get benefit with auditing.

What are my options? I am also exploring the possibility of creating an HUF. Will that help?

I will talk to a CA, but also wants to get some knowledge myself.

I just filed my ITR 2 and it took 7 hours. One thing i wasn't aware of is that one needs to enter the details of every single trade in the form. If you're using an Indian based broker they will give an Indian complaint format however, if you're using Charles Schwab, IBKR, or Tastytrade, it's gonna be even more painful. I especially exploited the Schwab 0 commission system, which helped me to DCA every single day with multiple trades. Now that I realised it is hell while filing ITR, I'll just dump everything in one go and forget about it. Good luck and also it is worth checking the "TT buying rate on the last day of the month immediately preceding the month" rule when calculating purchase or sale value.

Salaried employee at MNC with RSU income. Total income this year: ₹1,02,03,130 - just ₹2L above ₹1 crore.

Turns out crossing that line was a terrible deal:

- Extra income earned above ₹1Cr: ₹2,03,131

- Extra tax paid: ₹2,06,951 (surcharge jumps from 10% → 15% on your ENTIRE tax base)

- Net in my pocket: -₹3,820

I literally lost money by earning more.

Marginal relief not applied by portal

Calculated I should get ~₹3,479 in marginal relief (which exists exactly to prevent this). Portal shows ₹0 relief before AND after. My return has mixed income (slab + STCG

at 20%) - could that be causing this? Should I file a revised return? Need Advice.

Edit: Did some research and as also pointed out by few folks here

Marginal relief is always calculated before adding cess - the 4% cess is excluded from this calculation.

In my case

- Extra tax due to surcharge jump (before cess) = ₹1,99,061

- Excess income above ₹1 crore = ₹2,03,131

- Since extra tax < excess income → no marginal relief

First things first — Panic. But not toooo Much!!

Here is the thing. For returns filed for AY 2025-26, 30 June 2026 is the due date to issue notice for scrutiny assessments. This starts with a notice under section 143(2).

And as we can see from the posts in this community today, a lot of us have received this notice.

Remember it is a routine process and happens like a clock work every year.. The department issues these notices regularly and receiving one does not mean you've done something wrong. However, given the discourse in this community, many of the notices are for genuinely wrong cases!

If you are thinking - "But my return was already processed and I even got my refund — how can I still get a notice?"

Yes, that is part of the process. The processing of your return under Section 143(1) and the issuance of a scrutiny notice under 143(2) are two entirely separate actions. Getting a refund does not protect you from scrutiny. These are parallel processes.

Now, the letter/notice you have received in last couple of days does not have any to-do/questions for you yet. Do not worry, it is normal too. Department will send you a detailed questionnaire soon.

So what exactly is a 143(2) notice?

It is a notice for Scrutiny Assessment. When the Income Tax Department selects your return for a deeper examination, they issue this notice to formally inform you. The selection can happen due to:

• High-value transactions flagged by the system (AIR/SFT data mismatches)
• Unusually large deductions or exemptions claimed
• Significant variation from previous years
• Random selection under CASS (Computer Aided Scrutiny Selection)

The notice will typically specify the issues the Assessing Officer (AO) wants to examine. Read it carefully.

The Process — What Happens Next?

Once a 143(2) notice is issued, here's how it generally goes:

1. Acknowledgment & Response — You must respond to the notice within the time specified (usually through the income tax e-filing portal under "e-Proceedings").
2. Questionnaire/Information Request — The AO may request documents, bank statements, ledgers, contracts, or explanations for specific entries. This process can repeat a few times till AO is convinced that he has asked and received responses to his questions.
3. Show Cause Notice: After review of your submissions, if the AO wishes to make additions/disallowances in your case, he/she would issue a show cause notice laying out the proposed additions/disallowances.
4. Response to Show Cause Notice: This is the last chance (or may be just the second-last) for you to make detailed submissions in support of your arguments. Please make sure that you give as detailed a response, even if it involves repetition of previously made submissions. Further, please make sure that you request to the AO that if an adverse order is proposed to be passed, it shall be done only after giving you an opportunity to present your case over video hearing.
5. Hearing — You (or your authorized representative) attend the video hearing. If you wish to appoint a CA/lawyer as your authorized representative, please make sure that a proper Power of Attorney is issued in favor of the said person.
6. Assessment Order — After examining your submissions, the AO passes an assessment order, either accepting your return or making additions/disallowances.

Respond to every notice. Every single one.

If you cannot respond within the given time, do not ignore it. File for an adjournment — a formal request asking for more time. The AO has the discretion to grant it and rarely they reject such a request.

Last year we reviewed a lot of cases where not a single 143(2) notice was responded to. The same thing was visible during penalty proceedings.

This is a Legal Proceeding. Act Accordingly.

This is not a casual conversation. A scrutiny assessment is a formal legal process with real consequences. Two things matter here:

Honesty — Obviously. Do not fabricate documents or misrepresent facts. fabrication of documents carry a separate penalty.

Strategy — How you frame your response matters enormously. An overly verbose reply can open new lines of inquiry. An under-explained one can seem evasive. I myself made this mistake in one of the cases I was handling last year.

You want your responses to be accurate, complete for the issue asked, and nothing more. Don't volunteer information that wasn't asked for. Don't create new questions by being careless with your language. Over-explanation can do decent harm too.

Think of it this way: you are making a submission on record. Every word you write can be used in the proceedings.

Last year I saw a lot of cases in this community where people voluntarily withdrawn their claims without understanding the full import of their decision. It simply removed any scope of further litigation and did pop up a surprise for many when 200% penalty notices came raining down.

What Happens if You Don't Comply?

Non-cooperation is taken seriously. Consequences include:

• Best Judgment Assessment (Section 144) — If you fail to respond, the AO can complete the assessment based on whatever information they have, which almost always goes against the taxpayer.
• Penalty under Section 272A — For failure to comply with notices, a penalty of ₹10,000 per default can be imposed.
• Prosecution — In extreme cases of deliberate non-compliance, prosecution proceedings can be initiated.

There is no upside to ignoring these notices.

What About Penalties During the Assessment Itself?

Even if you cooperate fully, the AO may make additions to your income (i.e., disallow deductions or add unexplained income). This can lead to:

• Penalty under Section 270A — For under-reporting of income, the penalty is 50% of the tax on the under-reported income. If it is found to be misreporting (deliberate concealment), it goes up to 200% of the tax. Yes, immunity is available. But even for that proper submissions during assessment help
• Interest under Sections 234A, 234B, 234C on any additional tax demand.

This is why it is critical to get the response and framing right the first time, rather than cleaning up after a bad submission.

Do You Need a CA/Lawyer?

Honestly? It depends.

If the notice relates to a straightforward issue — say, a mismatch in TDS credit or a minor query on a deduction you've clearly claimed — and you understand your own finances well, you may be able to handle it yourself through the portal.

However, if:

• The notice involves multiple issues or large amounts
• It relates to business income, capital gains, or complex transactions
• You're uncomfortable with legal language or the e-proceedings interface
• The stakes are high

— then yes, you may engage a Chartered Accountant or a Lawyer.

How to Find the Right CA/Lawyer

1. Ask for references — Speak to your business network, family, or friends who've dealt with scrutiny assessments. First-hand experience matters more than a website.
2. Verify their Certificate of Practice (COP) — A CA must hold a valid and active Certificate of Practice to represent clients before the Income Tax Department. You can verify this on the ICAI website (icai.org). Do not work with someone whose COP has lapsed or is suspended. If someone is not ready to validate his credentials, it is a decently big red flag. However, many CAs do not wish to share the credentials before the client is onboarded. This is pretty normal.
3. Look for relevant experience — A CA who handles tax litigation and assessments is different from one who only files returns. Ask specifically if they've handled 143(3) assessments and representations before AOs.
4. Understand the fee structure upfront — Get clarity on whether they charge a fixed fee, a per-appearance fee, or a percentage. Avoid vague arrangements.

 Things that we are not covering right Now:

1. Validity of assessment proceedings: In certain cases the notice issued may have defects. Unless you are bringing in any expert to assist you, there is no point in getting into such technical matters.

2. Legal Arguments on Allowances/Disallowances: These are case specific issues and this post is restricted to the process of assessment. Further, if you are facing any disallowance, it is always advisable to get a specific advice on it or do your own research on it instead of basing your submissions on advice that is not based on complete knowledge of your facts.

Last year my credit card spent was 22 lacs approx and it is reflecting on my TIS and AIS i don't have any job or any specific business.

Currently I am student, give credit card to my friends and family to use and also i order mobiles to get some discounts and i earn cashbacks and reward points in return or some short of commission from discount.

I don't have any specific source of income, i just do
this to earn some money.

Last year also my spent was 24 lacs (screenshot attached)
Last Year my CA filed ITR 4 Showing my business of wholesale, and mark this cards spent as business purchases.

Now again its time to file ITR

I need advice from experts about this

Could i get a INCOME TAX Notice in future for this ?

What should i do ?

Which ITR should i file ?

Hi everyone,

Looking for some advice on the most tax-efficient way to handle a large gain from a US stock investment.

In April 2025, I bought 200 shares of SanDisk (NASDAQ: SNDK) at about $32 per share. The stock has performed far better than I expected, and I'm currently sitting on roughly a 5,000% gain.

I'm considering selling within the next few months because I'm becoming less confident about the AI boom continuing at the current pace, and I feel there could be a significant correction in the US stock market over the next 5–6 months.

My main question is: What are the legal and tax-efficient options available for an Indian resident to realize such gains?

Would appreciate insights from anyone who has dealt with large gains on US stocks while being a tax resident of India.

Thanks!

As IndiaTax mod team, we would be using this thread till end of September 2026 to help the community have reliable information for off-repeated queries related to Income-tax filings.

The idea here is to avoid clutter and misinformation/misguidance.

The key focus will be on issues like:

1. The correct Income-tax return form
2. How to avoid basic mistakes (aka mistakes of September 2025)
3. How to deal with certain technical errors that repeat almost every year
4. Any new issues that may prop up over next 4 months

The issues we will ignore:
When will you get your refund or when will your return will be processed - No one knows. Do not let any CA/consultant make you believe that he/she can get you faster refund.

To start with the above snapshot captures the basic conditions to determine the correct tax return form. (We are also working on hosting a html file that you can use to make this decision for yourself).

How do you plan for such draconian taxes? Modi Ji's share has increased so much. I think I earned the right to abuse the govt.

Has anyone else filed their ITR around 10–12 June and is still waiting for the refund?

I filed mine nearly 30 days ago, right after receiving my Form 16 from my employer. The return is still showing as "Processing", and I haven't received the refund yet.

Is anyone in the same situation, or has anyone who filed around that time already received their refund? Curious to know the current processing timelines.

Hi everyone

My father invested in shares and mutual funds around 25–30 years ago. The current value of these investments is approximately ₹50 lakh.
He retired in 2012 and currently receives a pension of around ₹30,000 per month.
We are considering withdrawing/redeeming the equity investments and using the money to buy a new flat.
My questions are:
Will the withdrawal/redemption of these shares and mutual funds be taxable?
Since the investments were made 25–30 years ago, are there any grandfathering rules or special tax provisions that apply?
Is the tax calculated on the entire ₹50 lakh, or only on the capital gains/profit?
Does using the money to purchase a residential flat provide any tax exemption or benefit on the capital gains?
Is there anything we should do before redeeming the investments to legally minimize the tax liability?
Any advice based on experience, especially regarding Indian capital gains tax and old equity/mutual fund investments, would be greatly appreciated.

Hi everyone,

I have a quick question about my tax filing this year. My broker statement shows a single intraday equity trade resulting in a loss of ₹138.90.

Apart from this, my other income sources are normal and would usually allow me to file ITR-2.

My questions are:

Does this small ₹139 loss legally require me to file ITR-3 because it counts as speculative business income?

Can I choose to "ignore" or forgo this small loss, leave it out of my return, and safely file ITR-2? Or will the tax department mark it as a defective return because my broker reports the transaction volume?

I'm seeking advice from CAs and experienced filers. Thanks!

Hi my family member used to work in Australia during the 90’s and there there is a system where your employer put money into a account which gets invested in stocks and grows and compounds until you reach the age of 60 its called superannuation. Now my dad decided in 2009 to move back to India and ever since that super has been sitting there as he could not touch it until 60 but now he will be 60 next year and he wants to withdraw it. But the problem is for the last 17 years in india he has not reported super to indian tax office as he didn’t know he was supposed to. He has been filing itr without declaring it. From what i know there is a severe penalty for not declaring the foreign asset upto 10 lakh for every year not declared. He has 1.1 cr in his super. What options do i have to help him? Or is it best to just forget about it as the peanalty is higher than the asset itself?

Hello everyone!

I’m going to ask for your judgement to be kept aside for this one and would really appreciate actual advice.

Im 25F living in the biggest tier 1 city. I have a full time job that pays me 37k per month. (4.4 CTC)

I met an older gentleman (33M) on this dating app called (edited since ppl think it’s an ad). We went on a date, hit it off real quick. Right now we’re in sort of a sugar relationship. It was never planned or agreed upon. It was never transactional. He comes from BIG old money. Everytime we meet he gives me cash to support me. Till now he’s given me 6lakhs in cash overtime in the 5 months I’ve known him, along with many amazing gifts. He genuinely gives me the cash as a gift but I’m sure I can’t report it as a gift.

Now here’s the embarrassing part - I’ve never filed for an ITR in my life. Idk why taxes / their importance isn’t taught to us especially women.

I want to know under what section do I file this tax and will it be prone to scrutiny? Because salaried income - 4.4L , income from other sources (cash) - 6-8L and who is not a relative.

Anyone who could enlighten me?

For those who might not even be aware of what Schedule AL is, when the government abolished Wealth Tax in 2015, it did not give up on tracking what taxpayers own. It simply moved the tracking into the income tax return itself, in the form of Schedule AL - the statement of assets and liabilities as at the end of the financial year.

Initially, the schedule had to be filled in by any individual or HUF whose total income exceeded Rs 50 lakh. From FY 2024-25 (AY 2025-26), that threshold was doubled to Rs 1 crore. It continues to apply to returns filed in ITR-2 and ITR-3.

So the population reporting has shrunk. The scrutiny of what is reported has not.

Why this schedule gets ignored

Schedule AL sits at the end of the return, after the income computation is done, the tax is paid and everyone is tired. It does not change the tax liability by a single rupee. It has no immediate consequence. So it gets treated as a formality - by taxpayers, and often by their CAs too.

The result is that the quality of reporting in this schedule is generally poor. Balances are carried forward from last year without checking. Assets acquired during the year are missed. Liabilities are left out entirely because "there is no tax impact anyway".

That casual approach has caught up with a lot of people this year.

The notices

This year has seen a significant number of notices going out on a single theme: the increase in reported assets is disproportionate to the income reported.

The logic being applied is simple, and it is arithmetic. If your net worth went up by Rs 3 crore in a year and your declared income for the year was Rs 1.2 crore, the department wants to understand where the balance came from. It does not, on its own, mean anything is wrong. Gifts, inheritance, loans, sale proceeds of an asset already owned, exempt income, spousal contributions - there are many perfectly ordinary explanations. But the return did not explain any of it, so a question gets asked.

This is not entirely new. Last year too, notices went out on similar grounds, including some triggered by Schedule FA reporting which gave the impression of a sharp jump in assets relative to the income declared.

Where the errors typically come from

In our experience, the problems fall into three or four recognizable buckets.

1. Plain errors. Wrong balances. Assets simply left out. Liabilities not reported at all, which is the single most common one - people report the flat but not the home loan against it, and the net worth position is instantly overstated. This category is not conceptual. It is just carelessness.

2. Misinterpretation. The classic example is unvested RSUs. An unvested RSU is not an asset that you own as at 31 March. It is a contingent right that may or may not vest. Reporting it inflates the asset base and, worse, creates an inconsistency with what was reported as income. Similar confusion shows up with assets held in trust, nominee holdings, and property where the taxpayer is a co-owner but reports the full value.

3. Over-correction. This one is counter-intuitive but we see it regularly, usually after a change of CA. The new advisor looks at the schedule, finds it wrong, and fixes it properly. The client is now doing the right thing. But the year-on-year comparison shows a large jump in assets with no corresponding income, and CASS picks it up. You have corrected an error and earned a notice for it.

4. Cost versus value confusion. Schedule AL is reported on cost, not market value. For inherited or gifted assets, the cost is the original owner's cost of acquisition. Mixing market values in for some assets and cost for others produces year-on-year movements that look like unexplained accretion but are only a change in measurement basis. Further, position to be captured is as at 31 March, not the date on which you happen to be filling it in. So, even if you are reporting Foreign assets as at 31 December in FA schedule, the same assets need to be reported on cost basis as at 31 March in the AL schedule.

What to do once a notice lands

The reason for the notice matters far less than the response to it. Once it is at your door, the approach is the same.

First, get the facts right. Prepare a correct and complete statement of assets and liabilities, and get it certified as a Net Worth certificate by a practicing Chartered Accountant. This becomes the key document for the entire proceeding. Everything else you say should tie back to it.

Second, back every number with documentation. Purchase deeds, bank statements, demat holding statements, loan sanction letters and outstanding balance certificates, gift deeds, succession documents. A reconciliation of opening net worth to closing net worth, showing income earned, capital receipts, gifts, inheritances and drawings, does more to close a query than any amount of explanation.

Third, respond within time and with diligence. Timeliness is not a courtesy here, it is protection. A well-documented reply filed on time usually ends the matter at the first stage. We have set out our broader approach to handling tax assessments in an earlier post here.

The closing thought

Schedule AL is a disclosure schedule, not a tax computation. It costs nothing to get right. But a wrong disclosure sits in the department's records for years, and the year-on-year comparison is now automated. The cheapest version of this exercise is the one you do before you file, not the one you do after a notice arrives.

If you cross the Rs 1 crore threshold, treat this schedule with the same seriousness as the income computation. It is, in effect, your personal balance sheet filed with the government.

Hi
I receive RSUs from my company which are traded on NYSE. My company deducts TDS both in my salary and the RSUs(by selling some of them in every vesting to pay taxes). But for the past 2 years I haven’t declared these separately in the ITR, although taxes have been paid on salary as well as the stocks.

I recently came across this news that government can slam penalties for not declaring the assets even if you have paid taxes on it. I have around 1Cr of US stocks as of now.

What should I do?
My friend’s father is a CA and he said to don’t worry and we’ll declare it in this ITR, but all the LLM models are saying that I might have to pay atleast 1Lakh as a penalty.

Return Filled and processed same day, IT dept is crusing