Who is required to file ITR -2 : ITR -2 is required to be filed by salaried taxpayers for Financial Year (FY) 2018-19.
Major disclosure requirement : ITR – 2 Form required disclosure of the assets and investments held outside India.
The details to be submitted are as under:
- Reporting the foreign income
This disclosure requirement is to be filed by resident and ordinarily resident (ROR).
An individual taxpayer (ROR), who has earned income from any source of foreign country including income of income from salary, house-property and investment incomes (i.e. interest, dividend and capital gains), etc.,are required to be considered while computing the total taxable income.
Also, the relevant schedules shall the filed related to the incomes i.e. the income of the source, tax paid on such income and applicabaility of DTAA shall be reported under Schedule as follows:
- ‘Foreign Source Income’ (country code, Taxpayer Identification Number (TIN), income from outside India, tax paid outside India, etc.) and
- Schedule ‘Tax Relief’ (country code, TIN, taxes paid outside India, tax relief claimed etc.)
- “Exempt Income Schedule”
Note : The taxes on the other source incomes shall be as per the relief as per Income Tax Act. 1961 or the provisions of DTAA (Double Taxation Avoidance Agreement) of the foreign country, whichever shall be beneficial for the asseessee or the taxpayer.
An individual who is resident of both the countries i.e. India as well as of some other foreign country and getting benefit of DTAA for any relief which is not chargeable to tax in should report the requisite details under the Schedule ‘Exempt Income’ as well.
However, TRC has to obtained from foreign country for claiming such benefit at the time of filing of Income Tax Return.
- Disclosure of Foreign Assets :
There is a requirement of providing the details of assets and accounts held outside India such as foreign bank accounts and financial interest in any entity or Trusts in the Schedule Foreign Assets (FA) by ROR.
This disclosure helps the Indian government to obtain information about the ROR from the foreign tax government. (In such case there must be the exist of bilateral treaties and agreements for exchange of information).
Form ITR -2 Includes the details of:
- Details of foreign depository accounts,
- custodial accounts,
- equity or debt interest in a foreign entity,
- foreign cash value insurance contract, etc.
However, Due to differences in periods of tax year of different countries, there may be a mismatch in the income reported in Schedule FA (i.e., based on accounting period of foreign country) for disclosure purpose as against the income reported in the income tax return (i.e., based on India tax year) for taxation purpose.
- Other Disclosures
ROR holding the unlisted equity shares during the FY is required to submit details as:
- Name and PAN of the company,
- opening balance of shares, s
- hares acquired/transferred during the year and
- Closing balance.
- Details of shares held in a foreign company. (Reporting of PAN of a foreign company is not mandatory).
Individual directors in a company are now required to furnish details such as:
- Company name,
- PAN of the company,
- whether shares of the company are listed and
- the Director Identification Number (DIN). (Reporting of PAN and DIN are optional in case of directorship in a foreign company).
NR taxpayers are required to furnish:
- Jurisdiction of tax residence and
- TIN during the relevant FY.
For an Indian citizen or Person of Indian Origin, the total period of stay in India during the relevant FY along with preceding four FYs is also required to be mentioned.