Saudi Arabia's participation in the Common Reporting Standard
Saudi Arabia is a committed CRS jurisdiction: its Zakat, Tax and Customs Authority (ZATCA) requires
reporting Saudi financial institutions to report account-holder information annually since 2018,
covering bank accounts, custodial accounts, and certain insurance and investment products held by
foreign tax residents. Because both India and Saudi Arabia are long-standing CRS participants, Indian
tax authorities receive periodic automatic data on Saudi financial accounts held by Indian tax
residents, though the precise first-exchange year for the bilateral relationship should be confirmed
against the OECD's published exchange-relationships data rather than assumed. In practice, this means
NRIs should not assume Saudi banking activity is invisible to Indian authorities merely because Saudi
Arabia does not itself tax individual income -- the CRS data flow operates independently of whether the
source country levies personal income tax, and mismatches between declared residential status and
reported account activity can attract scrutiny even where no tax is actually owed.
Schedule FA and the Black Money Act -- who actually needs to worry
A common misconception among NRIs is that any foreign bank account or asset must be disclosed on an
Indian tax return. In fact, Schedule FA disclosure under the Black Money (Undisclosed Foreign Income and
Assets) and Imposition of Tax Act, 2015 applies only to taxpayers classified Resident and Ordinarily
Resident (R&OR) under Section 6 of the Income-tax Act -- not to Non-Residents, and generally not to
Resident-but-Not-Ordinarily-Resident (RNOR) taxpayers either. A genuine NRI in Saudi Arabia, filing as a
non-resident for Indian tax purposes, has no Schedule FA obligation for Saudi bank accounts, Saudi
employer end-of-service gratuity balances, Saudi brokerage holdings, or other Saudi assets, and the
Black Money Act's stiff penalty regime -- including a flat Rs 10 lakh penalty per undisclosed asset and
potential prosecution -- simply does not engage while the person genuinely qualifies as non-resident
under Indian tax law.
When the compliance obligation actually starts
The Schedule FA obligation becomes live only if and when the NRI returns to India and, after the
RNOR transition period (roughly determined by the 2-of-10-years and 729-day tests under Section 6),
crosses into R&OR status. From that point, failing to disclose foreign assets can trigger penalties
under the Black Money Act, though a safe-harbour threshold exists for smaller, non-immovable foreign
assets held with an aggregate value below the prescribed limit. NRIs planning to return to India
permanently should plan their Schedule FA compliance around this transition rather than treating it as
an immediate concern while still genuinely non-resident, and should keep organized records of Saudi
bank statements, GOSI or end-of-service benefit details, and any Saudi investment holdings well before
the RNOR window closes, since reconstructing years of foreign financial history after the fact is far
harder than maintaining a running record while still abroad.
