When I filed my first Indian tax return after moving back in 2017, my chartered accountant asked me a question I wasn’t prepared for.
“Do you have your Annexure E ready?”
I had no idea what he was talking about.
I had my W-2 from my US employer. I had my US tax return. I had my Indian salary slips from my new job. I thought I was prepared.
I wasn’t even close.
Annexure E turned out to be one of the most important (and most confusing) documents in my return-to-India financial journey.
And since then, I’ve seen hundreds of NRIs in our WhatsApp community struggle with the exact same thing.
Many didn’t even know it existed until they got a notice from the Income Tax department.
Let me save you that experience.
What Exactly Is Annexure E?
Annexure E is the part of your Indian Income Tax Return where you declare your foreign income and claim credit for taxes you’ve already paid abroad.
It’s not a standalone form you download separately. It’s built into your ITR filing through three connected schedules:
Schedule FSI – Foreign Source Income. This is where you list all income earned outside India.
Schedule TR – Tax Relief. This is where you claim credit for foreign taxes paid, so you don’t get taxed twice on the same income.
Schedule FA – Foreign Assets. This is where you declare all assets held outside India – bank accounts, investments, property, insurance policies, everything.
Together, these schedules (along with Form 67, which we’ll get to) make up what people commonly call “Annexure E.”
If you’re a returning NRI or a Resident who earns any income from outside India, this is not optional. It’s mandatory.
Why Does This Matter to Returning NRIs?
Here’s the situation most returning NRIs find themselves in.
You moved back to India. You’ve been here for more than 182 days. Your residential status under the Income Tax Act has changed from NRI to Resident (either RNOR or ROR).
Now, depending on your status:
If you’re RNOR (Resident but Not Ordinarily Resident):
Your foreign income is generally not taxable in India. But you still need to declare it. And you still need to declare your foreign assets in Schedule FA.
Many RNOR filers skip Annexure E because they think “my foreign income isn’t taxable anyway.” That’s a mistake. The declaration requirement exists even when the income isn’t taxable.
If you’re ROR (Resident and Ordinarily Resident):
Your worldwide income is taxable in India. This is where Annexure E becomes critical. Without it, you can’t claim credit for taxes already paid in the US, UK, or wherever.
Without claiming that credit, you could end up paying tax twice on the same income.
That’s money you don’t need to lose.
The numbers can be significant.
One community member who returned from the US had about $40,000 in investment income (dividends, interest, capital gains) in his first year as ROR. He had already paid roughly $8,000 in US taxes on that income.
Without properly filing Annexure E and Form 67, he would have paid approximately Rs 8-10 lakh in Indian taxes on the same income. With proper filing, he claimed the US tax as credit and his additional Indian tax liability dropped to almost zero.
That’s the power of getting this right.
Form 67 – The Form That Makes It All Work
This is the piece that trips up most people.
Form 67 is a separate form you must file on the Income Tax e-filing portal to actually claim your Foreign Tax Credit (FTC). Filing Schedule FSI and Schedule TR in your ITR is not enough. You also need Form 67.
Think of it this way:
- Schedule FSI = “Here’s my foreign income”
- Schedule TR = “Here’s the tax credit I’m claiming”
- Form 67 = “Here’s the proof that I paid taxes abroad”
All three must be filed. Miss Form 67, and your tax credit claim gets rejected.
When to file Form 67:
As per the latest rules (amended in 2022), Form 67 must be filed on or before the end of the relevant assessment year.
So for FY 2025-26, Form 67 must be filed by March 31, 2027 (if you filed your return within the due date or as a belated return).
Previously, Form 67 had to be filed before the ITR due date. The relaxation to allow filing till the end of the assessment year was a welcome change – many NRIs were missing the earlier deadline and losing their tax credit entirely.
But don’t wait till the last day.
File Form 67 when you file your ITR, or even before. Get it out of the way.
How to file Form 67:
Step 1: Log into the Income Tax e-filing portal (incometax.gov.in)
Step 2: Go to e-File > Income Tax Forms > File Income Tax Forms
Step 3: Search for “Form 67”
Step 4: Select the relevant assessment year
Step 5: Fill in the details – country of income, nature of income, amount, tax paid abroad, article of DTAA under which credit is claimed
Step 6: Attach supporting documents
Step 7: Submit and verify using DSC or EVC
It’s online. You can do it from anywhere. No physical paperwork needed.
What Documents Do You Need?
Getting the documentation right is half the battle. Here’s what you’ll need to prepare.
From the US:
- W-2 (wage and tax statement from your employer)
- 1099 forms (for interest, dividends, capital gains)
- Form 1040 (your US tax return)
- State tax return (if applicable)
- Foreign tax payment receipts or IRS account transcripts
- Brokerage statements showing investment income and taxes withheld
From the UK:
- P60 (annual tax summary from employer)
- Self Assessment tax return
- HMRC tax calculation
- P45 (if you left employment)
From the UAE/Gulf:
- Salary certificate
- End of service benefit statement
- Since the UAE generally doesn’t levy income tax, Annexure E considerations are different here. You won’t have foreign tax to claim credit for, but you still need to declare the income once you’re ROR.
From Canada/Australia/Singapore:
- Tax assessment notice
- Employment income statements
- Tax payment receipts
For all countries – general documents:
- Bank statements from foreign accounts (last 6-12 months)
- Investment account statements
- Rental income records (if you have foreign property)
- Tax Residency Certificate (TRC) from the foreign country – this is important for DTAA claims
Pro tip from the community: Before you leave your country of residence, download EVERYTHING. Tax transcripts, payment records, brokerage statements, bank statements.
Once you’re no longer a resident there, accessing some of these documents becomes much harder. One member couldn’t access his IRS account transcripts from India because two-factor authentication was tied to his US phone number. Save yourself the headache.
The Currency Conversion Trap
This is where many NRIs make costly errors.
All foreign income must be reported in Indian Rupees in your ITR. But which exchange rate do you use?
You don’t get to pick a random Google rate. The Income Tax department expects specific rates.
The general rule:
For salary income, use the SBI Telegraphic Transfer (TT) buying rate on the last day of the month immediately preceding the month in which the salary is earned.
For other income (dividends, interest, capital gains), use the SBI TT buying rate on the last day of the month immediately preceding the month in which the income is received.
Where to find SBI TT rates:
SBI publishes daily TT buying and selling rates on their website. For historical rates, you can check the SBI archives or use the FBIL (Financial Benchmarks India Limited) reference rates.
Example:
You received a $5,000 dividend from your US brokerage in July 2025. The SBI TT buying rate on June 30, 2025 was (hypothetically) Rs 84.50 per dollar.
Your declared income = $5,000 x 84.50 = Rs 4,22,500.
Use the wrong rate, and the Income Tax department may question the entire credit claim.
Maintain a rate log. Track the SBI TT rates for each month alongside your income transactions. A simple spreadsheet works. This becomes your audit trail.
Income Types and How to Handle Each One
Different types of foreign income require different treatment in Annexure E. Here’s a breakdown of the most common ones for returning NRIs.
1. Employment income (salary)
If you worked in the US for part of the year before returning to India, this needs careful handling.
The US tax year is January to December. The Indian tax year (financial year) is April to March. These don’t align.
If you returned in September 2025, your US salary from April to September 2025 falls in Indian FY 2025-26. Your US W-2 covers January to September 2025. You need to separate the April-September portion for your Indian return.
Create a month-by-month breakdown of your US salary, taxes withheld (federal + state), and the corresponding SBI TT rates. This becomes your supporting document.
2. Investment income (dividends, interest, capital gains)
Most returning NRIs maintain US brokerage accounts and bank accounts even after moving. This income continues.
Each type has different DTAA treatment:
- Interest income: Under the India-US DTAA, interest can be taxed in both countries. The US withholds 15% (or as per treaty rate). You claim this as credit in India.
- Dividend income: Under the India-US DTAA, dividends can be taxed in both countries. The US withholds 25% on dividends for non-residents (reduced to 15% under treaty). You claim credit in India.
- Capital gains: Treatment depends on whether they’re short-term or long-term and the specific DTAA provisions. This is where it gets complex. Get a CA involved.
For each investment income item, you need: nature of income, amount in foreign currency, exchange rate used, amount in INR, tax withheld/paid abroad, and the DTAA article under which you’re claiming credit.
3. Rental income
If you still own property abroad and earn rent, this goes into Annexure E once you’re ROR.
Report the gross rental income. You can claim deductions (property tax, maintenance, mortgage interest) as per Indian tax rules. The net rental income is what gets taxed.
The US tax withheld on the net rental income (reported on your US return) can be claimed as credit in India.
One community member kept his California house as a rental after returning. His biggest challenge wasn’t the income declaration – it was coordinating between his US CPA (for the US return) and his Indian CA (for the Indian return) to ensure the income and credit amounts matched perfectly.
4. Retirement account income (401(k), IRA withdrawals)
This is one of the trickiest areas.
If you withdraw from your US 401(k) or IRA after becoming an Indian Resident, the withdrawal is taxable in India (if you’re ROR). The US will also withhold tax on the withdrawal.
You can claim credit for the US tax withheld. But the India-US DTAA provisions for retirement income are nuanced. Some CAs interpret them differently.
The smart move (and what I always recommend): make these withdrawals during your RNOR years when foreign income isn’t taxable in India. If you’ve already missed that window, consult a CA who specifically handles cross-border retirement account taxation.
5. Social Security income
If you receive US Social Security benefits, these may be taxable in India once you’re ROR. Under the India-US DTAA, social security benefits are generally taxable only in the country of residence.
So after you become a Resident of India, your Social Security income would be taxable in India and not in the US. This means there may not be any US tax to claim credit for.
Each country’s DTAA with India has different provisions. Don’t assume what applies to US income also applies to UK pensions or UAE income.
Schedule FA – Declaring Foreign Assets
This is the schedule that makes many returning NRIs nervous.
Schedule FA requires you to declare ALL foreign assets. Not just the ones earning income. Everything.
What must be declared:
- Foreign bank accounts (even dormant ones with zero balance)
- Foreign investment accounts (brokerage, retirement)
- Foreign property
- Foreign insurance policies
- Foreign stocks held directly
- Interest in any foreign entity or trust
- Any other foreign asset
The penalty for non-disclosure is severe.
Under the Black Money Act (Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015), failure to disclose foreign assets can result in a penalty of Rs 10 lakh. For undisclosed foreign income, the tax rate is a flat 30% plus penalty.
I’ve seen NRIs who didn’t declare their US bank account (which had just a few hundred dollars) receive notices. The amount doesn’t matter. The declaration does.
When does Schedule FA apply?
Only when you’re a Resident (RNOR or ROR) AND your total income exceeds the basic exemption limit.
NRIs filing returns are NOT required to fill Schedule FA (since they’re non-residents). But the moment your status changes to Resident, it kicks in.
Important: Even if an asset doesn’t earn any income, it must be declared. A vacant plot of land in the UK that earns zero income? Declare it. A US savings account with $50? Declare it.
For detailed guidance on this, read our article on disclosing foreign assets in Indian tax returns.
How Foreign Tax Credit Is Calculated
This is the math behind your tax saving.
The basic principle: You can claim credit for the lower of:
(a) Tax payable in India on the foreign income, OR (b) Tax actually paid in the foreign country
Example:
Your US dividend income: Rs 5,00,000 (converted to INR)
US tax withheld: Rs 75,000 (15% treaty rate)
Indian tax on this income (let’s say at 30% slab): Rs 1,50,000
Credit you can claim: Rs 75,000 (the lower of Rs 75,000 and Rs 1,50,000)
Your net Indian tax on this income: Rs 1,50,000 – Rs 75,000 = Rs 75,000
Without the credit, you’d pay Rs 1,50,000 in India on top of the Rs 75,000 already paid in the US. That’s Rs 2,25,000 total tax on Rs 5,00,000 income – a 45% effective rate.
With the credit, your total tax (US + India combined) is Rs 1,50,000 – a 30% effective rate. Fair and intended.
What if US tax is higher than Indian tax?
Sometimes the foreign tax rate exceeds the Indian rate for a particular income. In that case, you only claim credit up to the Indian tax amount. The excess US tax cannot be carried forward or refunded through the Indian system.
Can you claim credit for state taxes?
Yes. Both federal and state US taxes paid can be claimed as credit in India, provided they qualify as income tax (not sales tax, property tax, etc.).
Section 90 vs Section 91:
If India has a DTAA with the country where tax was paid, relief is claimed under Section 90 of the Income Tax Act.
If there’s no DTAA (rare, but possible with some countries), relief is claimed under Section 91, which provides unilateral relief.
For US, UK, Canada, UAE, Singapore, Australia – all have DTAAs with India. Section 90 applies.
Step-by-Step: Filing Annexure E in Your ITR
Here’s the practical process, simplified.
Step 1: Determine your residential status
Are you NRI, RNOR, or ROR for the financial year? This determines what you need to declare and what’s taxable.
For help with this, see our guide on the 182-day rule.
Step 2: Gather all foreign income documents
Collect W-2s, 1099s, bank statements, brokerage statements, rental records, and any other income proof from abroad.
Step 3: Convert to INR
Use SBI TT buying rates for each month’s income. Create a conversion sheet.
Step 4: Fill Schedule FSI in your ITR
For each income item, enter: country code, taxpayer ID in that country, nature of income, income amount (in INR), and tax paid outside India.
Step 5: Fill Schedule TR in your ITR
Enter the tax relief claimed for each country and income type. This is where the FTC calculation goes.
Step 6: Fill Schedule FA
Declare all foreign assets with details – country, account type, institution name, account number, peak balance during the year, closing balance, and income from the asset.
Step 7: File Form 67 separately
This must be filed on the e-filing portal. Attach supporting documents – foreign tax return, tax payment proof, TRC if applicable.
Step 8: Verify and submit your ITR
Review everything. Make sure the Schedule TR amounts match Form 67. Mismatches are a common reason for notices.
5 Common Mistakes NRIs Make
Based on years of community conversations and seeing actual tax notices, these are the errors that keep repeating.
Mistake 1: Not filing Form 67 at all
This is the biggest one. Many NRIs and their CAs fill out Schedule FSI and Schedule TR correctly in the ITR, but forget to file Form 67 separately.
Result: The entire foreign tax credit gets rejected. You pay full Indian tax on income you’ve already paid tax on abroad.
One community member lost Rs 3.2 lakh in credit because Form 67 wasn’t filed. He had to file a revised return and then a rectification request. Took 8 months to resolve.
Always verify that Form 67 is filed.
Mistake 2: Wrong currency conversion rates
Using Google rates, random forex rates, or even RBI reference rates instead of SBI TT buying rates.
The Income Tax department’s system knows the correct rates. If your numbers don’t match their reference, expect a query.
Mistake 3: Not declaring dormant foreign accounts
“But that account has only $100, it’s basically closed.”
Doesn’t matter. If it’s open and you’re a Resident, declare it in Schedule FA. The penalty for non-disclosure (Rs 10 lakh) is far more than the inconvenience of declaring a small account.
If you genuinely don’t need the account, close it properly before or shortly after returning to India.
Mistake 4: Mismatching income between US and Indian returns
If your US return shows $50,000 in investment income but your Indian return (after converting a subset to the Indian financial year) shows a very different number, it raises questions.
The mismatch usually happens because of the January-December vs April-March financial year difference. Document why the numbers differ. Keep a reconciliation sheet.
Mistake 5: Claiming credit for taxes not yet paid
If your US tax for the year hasn’t been finalized or paid yet (perhaps you’re on extension), you can’t claim credit for estimated or future taxes.
You can only claim credit for taxes that have been actually deducted at source (TDS/withholding) or actually paid. If you pay additional US tax later, you may need to file a revised Indian return.
RNOR vs ROR – How Annexure E Differs
Your filing requirements change significantly based on your status.
During RNOR years:
- Foreign income is generally NOT taxable (except income from business controlled from India)
- You still must declare foreign assets in Schedule FA
- You may not need to fill Schedule FSI and Schedule TR (since the income isn’t taxable)
- But keeping records of foreign income is still important for when you transition to ROR
During ROR years:
- ALL worldwide income is taxable
- Schedule FSI, Schedule TR, Schedule FA, and Form 67 are all required
- This is when Annexure E becomes critical for claiming foreign tax credits
- You must report everything – US salary, dividends, interest, rental income, retirement withdrawals, capital gains
The transition year:
The financial year in which you shift from RNOR to ROR is particularly important. All foreign income from April 1 of that year onwards becomes taxable.
Many returning NRIs try to complete major foreign financial transactions (selling US property, withdrawing retirement funds, liquidating US investments) during RNOR years to avoid Indian taxation.
Smart planning. But make sure you still declare these transactions in Schedule FA even during RNOR years.
Country-Specific Considerations
US NRIs (most common in our community):
The India-US DTAA (Double Taxation Avoidance Agreement) is well-established. Key treaty rates: 15% on dividends, 15% on interest (10% in some cases), capital gains taxed as per domestic law with credit available.
You need: W-2, 1099-DIV, 1099-INT, 1099-B, Form 1040, state return, IRS account transcript.
US state taxes are also eligible for credit in India.
UK NRIs:
India-UK DTAA allows credit for UK taxes paid. UK pension income has specific treaty provisions. P60, P45, SA302 tax calculation are key documents.
UAE/Gulf NRIs:
Since the UAE doesn’t levy personal income tax, there’s no foreign tax to claim credit for. But once you’re ROR, all income (including income earned during your UAE years that accrues after your return) becomes taxable in India.
The key issue for Gulf returnees isn’t Annexure E per se – it’s proper declaration of foreign assets accumulated during tax-free years.
Canada NRIs:
India-Canada DTAA is comprehensive. Canadian RRSP (similar to US 401k) withdrawals have specific provisions. T4 slips and Notice of Assessment are key documents.
Singapore/Australia NRIs:
Both have DTAAs with India. CPF (Singapore) and Superannuation (Australia) withdrawals have specific treaty treatments. Get specialized advice for these.
When You Get a Tax Notice
It happens. Even with careful filing.
Common reasons for notices related to Annexure E:
- Form 67 not filed or filed late
- Mismatch between Schedule TR and Form 67 amounts
- Foreign assets not declared in Schedule FA
- Currency conversion discrepancies
- TRC (Tax Residency Certificate) not submitted
What to do:
Don’t panic. Most notices are requests for information, not penalties.
Respond within the deadline (usually 15-30 days). Provide the requested documents. If you need to revise your return, do it promptly.
Having a CA who understands NRI taxation is invaluable at this point. Not all CAs are familiar with cross-border tax credit claims. Find one who is. Our guide on financial advisors for NRIs can help.
FAQs
Is Annexure E mandatory for all NRIs?
Not for NRIs (non-residents). It becomes relevant when your status changes to Resident (RNOR or ROR). NRIs only pay tax on Indian income and don’t need to declare foreign income or assets.
Can I file Form 67 after the ITR due date?
Yes, as per current rules. Form 67 can now be filed on or before the end of the assessment year (March 31 of the year following the financial year). But file it as early as possible.
What if I don’t have a Tax Residency Certificate?
A TRC strengthens your DTAA claim but may not be absolutely mandatory in all cases. Some CAs recommend filing without TRC and providing it if the department asks. However, having it upfront is always safer.
For US tax residency, a copy of your filed US return along with your social security number generally serves as sufficient proof.
Do I need to declare my US 401(k) or IRA in Schedule FA?
Yes. Foreign retirement accounts must be declared in Schedule FA once you’re a Resident. The account balance, contributions, and any income/withdrawals all need to be reported.
What if I overpaid US tax? Can I claim credit for the full amount?
No. You can only claim credit for tax that was actually due and paid. If you overpaid and received a refund from the IRS, the credit amount should be reduced by the refund.
I’m RNOR. Do I still need to fill Schedule FA?
Yes. Schedule FA is required for all Residents (both RNOR and ROR) if total income exceeds the basic exemption limit. The income may not be taxable during RNOR, but the asset declaration is still mandatory.
Can my US CPA help with Annexure E?
Your US CPA can help with the US-side documentation (W-2s, 1099s, US return). But for the Indian filing of Annexure E, Schedule FSI/TR/FA, and Form 67, you need an Indian CA who understands DTAA provisions.
The best approach: have both your US CPA and Indian CA coordinate. They each catch different issues.
What happens if I close all my US accounts? Do I still need Annexure E?
If you have zero foreign income and zero foreign assets, you don’t need to fill these schedules. But in the year you close accounts, you still need to declare them for the period they were open.
Is there a penalty specifically for not filing Form 67?
There’s no separate penalty for not filing Form 67. But the consequence is that your foreign tax credit claim gets denied. That effectively means you’re paying double tax on that income – which is a financial penalty in itself.
Should I hire a CA or can I do this myself?
If your foreign income is limited to simple interest and small dividends, you might manage with the help of online guides and tax filing platforms.
But if you have employment income spanning two countries, rental income, capital gains, retirement account withdrawals, or significant foreign assets, hire a CA who specializes in NRI taxation. The filing fee (usually Rs 10,000-25,000 for a comprehensive NRI return) is a fraction of what you could lose from mistakes.
Read our complete guide on filing ITR for NRIs for more details on the overall process.
The Bottom Line
Annexure E isn’t glamorous. Nobody moves back to India excited about filling out tax schedules.
But it’s one of those things that can save you lakhs – or cost you lakhs – depending on whether you get it right.
Here’s my simple advice:
Before you leave your current country: Download every tax document, payment receipt, and financial statement you can. Future you will be grateful.
In your first year back: Determine if you’re RNOR or ROR. This shapes everything.
Every year you’re a Resident: File Schedule FSI, Schedule TR, Schedule FA, and Form 67. Don’t skip any of them.
Get help: A good CA who understands cross-border taxation is not an expense. It’s an investment.
And track your RNOR years carefully. They’re the window when you can make big foreign financial moves without Indian tax implications. Once that window closes, Annexure E becomes your best friend for avoiding double taxation.
Disclaimer: Tax laws are complex and subject to change. The information here is based on the Income Tax Act 1961 (as amended), Income Tax Rules 1962, and applicable DTAAs as of 2026. This is informational guidance, not tax advice. Always consult a qualified chartered accountant for decisions specific to your situation.
If you’re planning your move back, join our WhatsApp community at https://backtoindia.com/groups – 20,000+ NRIs helping each other with real, lived experience. It’s free and volunteer-run.
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