Own foreign assets? Experts explain exchange rate rule for filing ITR

Using Google or bank exchange rates for foreign assets can lead to mistakes, experts explain what taxpayers should know

Resident taxpayers with foreign bank accounts, overseas shares, employee stock options (ESOPs) or other foreign assets must disclose them while filing their income tax returns (ITRs) for Assessment Year (AY) 2026-27. However, simply reporting these assets is not enough.

 

Such taxpayers also need to convert their value into Indian rupees using a specific exchange rate prescribed under the Income-tax Rules.

 

Experts say many taxpayers use Google, RBI reference rates or exchange rates quoted by their banks. But for reporting foreign assets in Schedule FA, the prescribed rate is the Telegraphic Transfer Buying Rate (TTBR) of the State Bank of India (SBI). Using any other rate could result in incorrect disclosures and invite unnecessary scrutiny.

 

Why can't you use Google or RBI exchange rates?

According to Chandni Anandan, chartered accountant and tax expert at ClearTax, a common mistake taxpayers make is using the wrong exchange rate.

 

“For Schedule FA, foreign values must be converted using the Telegraphic Transfer Buying Rate (TTBR) adopted by the State Bank of India on the relevant date, not the rate from a search engine, a news site or the taxpayer's own bank,” she said.

 

She added that another common error is applying a single exchange rate, typically the year-end rate, to every foreign asset. Different values in Schedule FA require different dates for conversion.

 

Echoing this, Ashwini Kumar, advocate and founder of My Legal Expert, said taxpayers often treat Schedule FA as a routine disclosure, overlooking the technical requirements relating to valuation, documentation and exchange rate conversion.

 

He noted that many taxpayers incorrectly use publicly available exchange rates or apply one exchange rate across all foreign assets without checking the reporting rules applicable to each category. While such mistakes may not amount to concealment, they can create inconsistencies and lead to avoidable questions during assessment. 

The “relevant date” depends on what you are reporting

One area that often confuses taxpayers is deciding which date should be used for currency conversion.

Anandan explained that the relevant date depends on the figure being reported rather than the type of asset.

For instance:

• The acquisition value of a foreign investment should be converted using the SBI TTBR on the date of acquisition.
• The peak value should be converted using the TTBR applicable on the date when the investment reached its highest value.
• The closing value should be converted using the TTBR on December 31, 2025, the last day of the reporting calendar year for AY 2026-27.

She illustrated this with foreign shares acquired during the year. The acquisition value, peak value and year-end value may all require different exchange rates because they relate to different dates. 

Parag Jain, chartered accountant and tax head at 1 Finance, said taxpayers should also remember that Schedule FA follows the calendar year (January 1 to December 31) and not India's financial year. 

"For AY 2026-27, taxpayers must report foreign assets held at any point between January 1, 2025 and December 31, 2025. Many mistakenly report only assets held as of March 31, 2026," he said.

 

A practical example

Jain explained that suppose an employee's restricted stock units (RSUs) vested on July 15, 2025. The initial value reported in Schedule FA should be calculated using the SBI TTBR applicable on the vesting date. However, the employer may have used a different exchange rate while calculating salary income under separate tax provisions.

 

“The two figures can legitimately differ because they are governed by different rules,” he said, cautioning taxpayers against trying to reconcile the two.

 

Similarly, Anandan said a resident holding US-listed shares should use separate TTBR rates for the acquisition value, peak value and closing value instead of converting the entire holding using one convenient exchange rate.

What if the wrong exchange rate is used?

Experts say using an incorrect exchange rate may not automatically result in a penalty if the difference is minor, but it can still make the return technically inaccurate.

 

Anandan said if the incorrect rate leads to a material misstatement, the Income Tax Department may seek clarification. Where taxpayers identify such errors themselves, filing a revised return within the permitted time is the safest approach.

 

Jain added that larger valuation differences, particularly for sizable overseas portfolios, could become significant during scrutiny.

 

Meanwhile, Mihir Tanna, associate director at S.K. Patodia LLP, said foreign asset disclosures are increasingly being verified through the Automatic Exchange of Information (AEOI) framework under CRS and FATCA. Mismatches may trigger compliance notices or scrutiny. 

He also cautioned that taxpayers should disclose even dormant foreign bank accounts or accounts with small balances if they are reportable under Schedule FA.

 

Keep documents ready before filing

Experts advise taxpayers to organise their records before starting the ITR.

 

According to Anandan, taxpayers should reconcile their disclosures with the Annual Information Statement (AIS), which now includes foreign asset and income information received under international information-sharing arrangements.

 

Ashwini Kumar said taxpayers should maintain acquisition documents, brokerage statements, foreign bank statements and evidence of the SBI TTBR used for every disclosure. For returning residents and employees holding shares in overseas companies, maintaining proper records significantly reduces reporting errors. 

Jain advised taxpayers to first determine their residential status, as Schedule FA generally applies only to Resident and Ordinarily Resident (ROR) individuals and not to NRIs or Resident but Not Ordinarily Resident (RNOR) taxpayers. He also recommended downloading the SBI TTBR applicable on each relevant date and preserving those records along with the filed return.

 

Tanna added that taxpayers who have paid tax overseas should also ensure they complete the prescribed compliance requirements for claiming foreign tax relief, wherever applicable.

 

With overseas investments becoming increasingly common among Indian professionals, especially those holding foreign shares or ESOPs, experts say accurate reporting is no longer just a disclosure requirement. Using the prescribed SBI TTBR, maintaining supporting documents and reporting foreign assets for the correct calendar-year period can help taxpayers avoid unnecessary notices and ensure their returns remain compliant.