FATCA and CRS: Why Your Indian Bank, Mutual Fund and Demat Accounts Are Already on Your Tax Office's Desk Abroad

In November 2025 the Central Board of Direct Taxes sent SMS messages and emails to a list of high-risk taxpayers asking them to revise their returns by 31 December and disclose foreign assets they had left out. The department did not guess who to message. It ran the financial account data it had already received from more than 100 countries under the Common Reporting Standard, and from the United States under FATCA, against what those same people had filed in Schedule FA, and flagged the mismatches. The previous year's version of this exercise pulled 24,678 taxpayers into disclosing foreign assets worth about Rs 2,29,208 crore. If you are an NRI today and plan to move back, or you already have, the single most useful thing to understand is that the question is no longer whether India can see your foreign accounts. It already does.

The 30-second answer: Every Indian bank, mutual fund, NBFC and depository is a reporting financial institution under FATCA (the US law) and CRS (the OECD standard, 100-plus countries). Using the self-certification you signed at KYC, they identify accounts held by people tax-resident abroad and report them to the CBDT, which forwards the data to your country of residence: name, address, foreign TIN, date of birth, account number, year-end balance, and gross interest, dividends and sale proceeds. The exchange is reciprocal: the US and CRS partners report your foreign accounts back to India. You must declare those in Schedule FA from the year you become Resident and Ordinarily Resident. Non-disclosure is governed by the Black Money Act, 2015: Rs 10 lakh per year, 30% tax, up to 3x penalty, and up to 7 years' prosecution. The data already exists; the only variable is whether your return matches it.

This guide is not a primer on what an NRE or NRO account is, and it assumes you know roughly what your residency status means; if not, read the residency and RNOR guide first. What follows is the part that decides whether you sleep well: exactly what FATCA and CRS report and to whom, the one-page form you almost certainly signed without reading, why the matching catches people who thought they were invisible, and the precise compliance steps for an NRI and for a returning resident who has just crossed into ROR.

Two systems, one outcome: your accounts are visible across borders

There are two regimes doing nearly the same job, and it helps to keep them straight because they apply to different people.

FATCA is American. The Foreign Account Tax Compliance Act compels foreign financial institutions to report accounts held by US persons, meaning US citizens, green card holders and US tax residents. India implemented it through an Inter-Governmental Agreement signed in July 2015, of the Model 1 reciprocal type. Model 1 means Indian institutions do not report to the IRS directly. They report to the CBDT, which then exchanges the data with the IRS. Reciprocal means the traffic runs both ways: the IRS reports Indian residents' US accounts back to the CBDT.

CRS is the global version. Developed by the OECD and modelled closely on FATCA, the Common Reporting Standard is a single multilateral framework now covering more than 100 jurisdictions, including the UK, UAE, Canada, Singapore, Australia and most of Europe. India has been exchanging under CRS since 2017. The mechanics mirror FATCA: each country's financial institutions identify accounts held by people tax-resident in another participating country, report them to their own tax authority, and that authority swaps the data with the relevant partner.

The practical effect for you is identical whichever applies. If you are an NRI in London, your Indian accounts flow to HMRC under CRS. If you are in Dubai, they flow to the UAE Federal Tax Authority. If you are in the US, they flow to the IRS under FATCA. There is no country on the NRI map, the UK, UAE, USA, Canada, where your Indian financial footprint is invisible to the local tax office. And when you return to India and become a resident, the same plumbing carries your foreign accounts to the CBDT.

The thing people miss is the breadth of what counts as a reporting institution. It is not only banks. Mutual fund houses and their registrars (CAMS, KFintech), depository participants and brokers holding your demat account, NBFCs, and most life insurers are all reporting financial institutions. Your SIP, your direct equity in a demat account, your fixed deposit, your ULIP: each sits inside an institution that files an annual report identifying you as a foreign tax resident.

The form you signed without reading: the FATCA-CRS self-certification

Open the account-opening pack for any Indian bank account, mutual fund folio or demat account you started in the last several years and you will find a page headed something like "FATCA-CRS Declaration and Supplementary KYC Information." You signed it. Most people treat it as one more signature in a stack. It is, in fact, the legal hinge of the entire system.

On that page you declared your country of tax residence and your Taxpayer Identification Number in that country, your place and date of birth, and whether you are a US person. For an NRI in the UK that means your UK address and National Insurance number or UTR; in the US, your SSN or ITIN; in the UAE, your Emirates ID-based TIN; in Canada, your Social Insurance Number. That self-certification is what the institution relies on to decide that your account is reportable and to whom. It is not a formality the bank can waive.

Two consequences follow that catch people out. First, a stale or wrong self-certification is itself a problem. If you moved from the UAE to Canada and never updated your fund house, your gains are being reported to the wrong authority, and a "change in circumstances" that you failed to flag is exactly the kind of inconsistency that surfaces later. The institutions are obliged to obtain a fresh self-certification when they have reason to believe the old one is unreliable. Second, non-submission freezes you. Since FATCA-CRS certification is now mandatory for all mutual fund investors regardless of folio size, an incomplete declaration leads to the folio being frozen: no fresh purchases, no SIP debits, no redemptions, until you cure it. NRIs who let a KYC lapse discover this at the worst moment, usually when they try to redeem. The mutual fund KYC guide covers the re-KYC mechanics in detail.

Consider Anjali, who moved from Bengaluru to Manchester in 2019 and kept her three Indian mutual fund folios and an NRO savings account. At each KYC she ticked "tax resident of the United Kingdom" and gave her UK UTR. From the financial year of her move, those three folios and the NRO account have been reported every year: balances, dividends, and the gross redemption proceeds whenever she switched funds. She has never seen the report and never will. HMRC has. When she eventually files a UK return that omits the Indian dividend income, the mismatch is sitting in HMRC's system waiting. Nothing about this is exotic; it is the default state of an ordinary NRI's accounts.

What actually gets reported, field by field

Vague talk about "information sharing" lets people imagine it is less granular than it is. It is granular. For each reportable account the institution transmits a defined set of fields, and they are worth knowing precisely because the precision is what makes matching possible.

The identifying block is your name, address, jurisdiction of tax residence, foreign TIN, and date and place of birth. The account block is the account number and the name of the reporting institution. Then the money: the account balance or value as at the end of the calendar year (or at closure, if you shut it mid-year, so closing an account does not erase it from the report). For a depository or custodial account, they add the gross interest, gross dividends, and other income credited during the year, plus, and this is the field people underestimate, the gross proceeds from the sale or redemption of securities paid into the account.

That last field matters because it is gross, not net. When you redeem Rs 40 lakh of an equity fund, the full Rs 40 lakh of proceeds is reported, not your Rs 6 lakh of gain. To a foreign tax authority looking at the feed, a large gross proceed against an account they have no record of in your local return is a flag, even though most of it is your own capital coming back. You will not be taxed on the gross figure, but you may have to explain it, and "I forgot to mention the Indian brokerage account" is not a comfortable explanation to be giving HMRC or the IRS after the fact.

Put concrete numbers on a single NRI's annual report. Take Vikram in Dubai, with an NRO fixed deposit, an equity demat account and two mutual fund folios. In calendar year 2025 his NRO FD paid Rs 1,80,000 of interest; his demat account received Rs 95,000 of dividends and he sold shares for gross proceeds of Rs 22,00,000; his fund folios paid no dividend but he redeemed units for Rs 8,50,000. His December 2025 balances were Rs 30,00,000 across the lot. Every one of those figures, the Rs 1,80,000, the Rs 95,000, the Rs 22,00,000, the Rs 8,50,000 and the Rs 30,00,000, is in the file the CBDT sends to the UAE authority, tagged to Vikram's name, Emirates ID-linked TIN and date of birth. The UAE levies no personal income tax, so in his case there is no foreign liability to reconcile, which is precisely why Gulf NRIs feel the least friction here. The same report sent to the IRS or HMRC for an identical portfolio would have to line up against a US or UK return.

The reciprocal half: your foreign accounts flow back to India

NRIs focus on the outbound direction and forget the inbound one, which is the half that matters the day you move home. Under the FATCA IGA, US financial institutions report Indian-resident account holders to the IRS, which transmits the data to the CBDT. Under CRS, every partner jurisdiction does the same for India's residents. So your Charles Schwab brokerage, your Barclays current account, your HSBC UAE savings, your Canadian RRSP and TFSA, your 401(k) and your UK workplace pension are, or will be, visible to the Indian tax department once you are an Indian resident.

The trigger for your Indian obligation is residency, and this is where the RNOR rules become load-bearing rather than academic. While you are a non-resident, your foreign assets and foreign income are simply outside India's net, and Schedule FA does not apply to you. When you return, you typically spend two to three years as Resident but Not Ordinarily Resident (RNOR), during which your foreign income remains largely untaxed in India and, crucially, Schedule FA still does not apply. Schedule FA bites only from the year you become Resident and Ordinarily Resident (ROR).

That RNOR window is a genuine grace period, and it is the most valuable and least understood feature of returning. It gives you two to three years to reorganise, repatriate, restructure or simply finish maturing foreign instruments before the disclosure obligation and worldwide taxation switch on. But it is not a hiding place. The CBDT is receiving your foreign account data from abroad throughout, including during your RNOR years. The exemption is from the obligation to report and from tax on most foreign income, not from the department's visibility. So the discipline is to know exactly which financial year you tip into ROR, and to have Schedule FA complete and correct in the very first ROR return. The returning-to-India checklist sequences the account-by-account decisions to make during the RNOR window.

Why undisclosed accounts get caught now, when they did not before

For decades the practical reality was that the Indian tax department could not see your foreign accounts unless you told them. Enforcement relied on disclosure and the occasional leak. That world is gone, and the reason it is gone is automation.

The CBDT now receives a structured annual feed of foreign financial account data for Indian residents, typically within nine months of the calendar year end, in a standard format designed to be matched by software, not read by a human. It runs that feed against Schedule FA and the Foreign Source Income schedule in filed returns. Where an account appears in the inbound CRS or FATCA data but not in the taxpayer's Schedule FA, the case is flagged automatically. That is the entire mechanism behind the November 2024 and November 2025 "NUDGE" campaigns: the department identified high-risk cases from the Automatic Exchange of Information data for the relevant year, then messaged those specific taxpayers to revise their returns before a deadline. In 2025 it told them to fix things by 31 December. These are not random audits; they are data-driven, name-by-name.

The same matching runs in the outbound direction abroad. The IRS, HMRC, the CRA and others receive your Indian account data and check it against your local return. So an NRI is exposed on both sides: under-reporting Indian income to a foreign authority, and, after becoming ROR, under-reporting foreign assets to India. The honest framing is that the cost of getting caught has not changed much, but the probability has gone from low to near-certain for anyone with a material account, because a matching engine does not get tired, distracted or bribed.

There is one nuance worth stating plainly, because it cuts the other way. The data is not perfect. TINs get mis-keyed, addresses go stale, a UAE account can be reported as US because a self-certification was wrong, and dormant or jointly-held accounts produce confusing entries. A meaningful share of NUDGE notices land on people who did nothing wrong, often returning NRIs whose RNOR status meant they had no obligation to report at all, or NRIs whose foreign income is genuinely not Indian-taxable. The remedy when a notice is genuinely unwarranted is to respond with the explanation and proof of residency status, not to panic, and not to ignore it. Ignoring an Automatic Exchange of Information notice is what converts a clerical mismatch into a Black Money Act problem.

The teeth: this runs under the Black Money Act, not the ordinary one

Here is the fact that should change how seriously you take Schedule FA. Failure to disclose a foreign asset is not penalised under the familiar Income Tax Act, with its appeals and its proportionate penalties. It is penalised under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, a separate and far harsher statute written specifically for offshore non-disclosure.

The exposure has three layers. First, a flat penalty of Rs 10 lakh for each year an asset goes unreported in Schedule FA, regardless of the asset's size or whether any tax was actually due on it. A modest foreign bank account left off three years of returns is Rs 30 lakh of penalty exposure before any tax is even discussed. Second, where the source of an undisclosed foreign asset or income cannot be explained, tax at a flat 30% of the value, with no exemption, no deduction and no slab. Third, a penalty of up to three times that tax, which on the 30% base means up to a further 90% of value, so the combined tax-and-penalty civil exposure on an unexplained asset can reach roughly 120% of its value. And beyond the money, the Act carries prosecution of up to seven years' rigorous imprisonment for wilful attempts to evade, which is the part that makes corporate employers nervous enough to email their staff every December.

There is a relief, and it is narrow. Since October 2024, foreign assets other than immovable property whose aggregate value is below Rs 20 lakh will not attract the Rs 10 lakh per-year penalty. It is a sensible carve-out for the NRI who returns with a small dormant overseas savings account, and it removes the most disproportionate outcomes. It does not cover foreign property, it is an aggregate test across all such assets, and it does not make non-disclosure legal; it removes one penalty for small cases. Do not treat it as permission to leave a foreign account out of your return.

Trace this through a returning NRI who gets it wrong. Suppose Priya moves back to India in 2022, becomes ROR for the financial year 2025-26, and that year holds a US brokerage account worth Rs 60,00,000, a 401(k), and a UK savings account, none of which she puts in Schedule FA because she assumed foreign assets were "not Indian business." The IRS and HMRC have already reported all three to the CBDT. The matching flags her. Because the brokerage alone is above Rs 20 lakh and is not immovable property, the Rs 20 lakh relief does not save her: she faces Rs 10 lakh of penalty for that year of non-disclosure, and if she cannot satisfactorily explain the source, 30% tax on Rs 60,00,000, that is Rs 18,00,000, plus a penalty of up to three times Rs 18,00,000, that is Rs 54,00,000. The civil exposure on a single account she simply forgot to mention runs past Rs 70 lakh, against a portfolio she had already paid for with taxed savings. Had she instead listed all three accounts in Schedule FA in her first ROR return, declared the year's interest and dividends as foreign income, and claimed foreign tax credit on Form 67 for the US tax already withheld, her actual Indian cost would have been a small top-up at most, possibly nil. The difference between Rs 70 lakh of exposure and near-zero was one schedule in one return.

What an NRI must do, and what a returning resident must do

The compliance split cleanly by status, so treat them separately.

While you are a non-resident NRI, your job is upstream and small. Keep your FATCA-CRS self-certification accurate at every Indian institution: correct country of tax residence, correct foreign TIN, updated whenever you change countries. This is not optional housekeeping; it determines that your accounts are reported to the right authority and shields you from the "unreliable self-certification" problem. Then ensure that whatever Indian income arises, NRO interest, dividends, capital gains, is declared correctly in your country of residence where that country taxes worldwide income, because that authority already has the Indian-side figures. The US, UK and Canada tax their residents on worldwide income, so an NRI there must report Indian income on the local return; the UAE does not tax personal income, so a Gulf NRI has nothing to reconcile abroad. You do not file Schedule FA in India as a non-resident; it does not apply to you.

When you return and become RNOR, you still do not file Schedule FA, and your foreign income is largely untaxed in India. Use the two-to-three-year window deliberately: decide which foreign accounts to keep, close or repatriate, let foreign instruments mature where the timing is favourable, and most importantly, pin down the exact financial year you become ROR, because that is the year everything switches on. Get the residency arithmetic wrong and you either over-report a year early or, far worse, under-report the year you should have started.

From the first ROR year onward, Schedule FA is mandatory and comprehensive. Report every foreign asset: bank and brokerage accounts, shares and funds, foreign pensions and retirement accounts (US 401(k) and IRA, UK and Canadian pensions, where reportable), cash-value insurance, foreign property, and any account in which you have a beneficial interest or signing authority. Report it even if it generated no income that year, and even if you believe it is below a threshold; the Schedule FA disclosure obligation is about the asset existing, not about tax being due. Separately, declare the foreign income that asset produced in the Foreign Source Income schedule, and claim relief for foreign tax paid through Form 67 and the relevant treaty so you are not taxed twice. The full mechanics, including the specific reporting period quirk (Schedule FA uses the foreign calendar year, not the Indian financial year) and the line-by-line entries, are in the Schedule FA reporting guide.

The single discipline that ties it together: assume the CBDT and your foreign tax office already hold the data, and file so that your return matches what they hold. Compliance here is not about hiding less; it is about reconciling. The penalty regime punishes the gap between what is reported about you and what you report yourself, so the entire game is closing that gap to zero.

Edge cases

Joint accounts and accounts held for parents. An NRI who is a joint holder or signatory on a resident parent's Indian account can find that account swept into the reportable set, because the foreign-resident holder makes it reportable to the foreign authority. Conversely, a returning ROR who holds power of attorney or signing authority over a relative's foreign account may have a Schedule FA reporting obligation even without ownership. Beneficial interest and signing authority both count; mere ownership is not the only test.

The accidental US person. Someone born in the US who left as an infant, or a green card holder who never formally surrendered the card, is a US person for FATCA whether or not they think of themselves as American. Their Indian institutions should be reporting them to the IRS, and they may have US filing obligations they are unaware of. If your self-certification does not mention a US connection that genuinely exists, that is a misstatement, not a convenience.

RNOR notices that should not have been sent. Because the inbound data arrives regardless of your status, returning NRIs in their RNOR years sometimes receive NUDGE messages about "unreported foreign assets" when they had no obligation to report. The correct response is to reply establishing RNOR status for the year, not to file a Schedule FA you did not owe. Keep your day-count records and residency computation, because they are your evidence.

Closed accounts are not erased. Shutting a foreign account before year-end does not remove it from that year's exchange; closure is itself a reportable event with the value at closure. You cannot tidy a history by closing accounts, and the year of closure still has to appear in your Schedule FA if you were ROR.

The Rs 20 lakh relief is per the whole basket, not per account. Three small foreign accounts of Rs 8 lakh each are Rs 24 lakh in aggregate and outside the relief, even though each alone is under Rs 20 lakh. And the relief never covers immovable property, so a small foreign flat is reportable on its own footing.

The closing read

The honest read is that FATCA and CRS have quietly removed secrecy as a strategy, and most NRIs have not internalised that the change is already complete, not coming. Your Indian accounts are reported to where you live, your foreign accounts are reported to India once you are resident, and the matching is automated, name-by-name, and running every year. The November 2025 NUDGE campaign was not a warning shot; it was the system working as designed.

So the recommendation for the common case is unglamorous and absolute. Keep your FATCA-CRS self-certification current at every Indian institution while you are abroad, and report your Indian income honestly on your country-of-residence return. The day you become Resident and Ordinarily Resident, put every foreign account into Schedule FA, declare the foreign income, and claim foreign tax credit through Form 67 so you are not taxed twice. Treat Schedule FA as the most important schedule in your return, because it is the one policed by the Black Money Act and its Rs 10 lakh-per-year, 30%-tax, three-times-penalty, seven-years-prison apparatus, not the gentler Income Tax Act. The exception worth naming is the genuine RNOR who receives a notice for assets they did not have to report: there the answer is to respond with proof of status, calmly, not to over-disclose in a panic. For everyone else, the math is settled. The data exists. File so that your return agrees with it, and the entire regime becomes a non-event. Try to file around it, and you are betting against a computer that already has your account numbers.

Related guides

• Schedule FA: reporting foreign assets in your ITR
• NRI residency and the RNOR rules
• Foreign tax credit and Form 67
• NRI mutual fund KYC and re-KYC
• Relocating back to India: the checklist
• Capital gains tax for NRIs on shares and mutual funds
• All News and analysis
• All Taxation guides
• All Investments guides

This guide is educational and general in nature. It is not individual tax or legal advice. FATCA, CRS, Schedule FA and the Black Money Act involve heavy penalties and prosecution risk, your obligations turn on your exact residency status and the year you become ROR, and the rules and relief thresholds change, so confirm your specific position with a qualified chartered accountant before you file or respond to any notice.