Foreign ESOP Not Declared? Your ₹10L Penalty Risk

A tax tribunal cancelled a ₹10 lakh Black Money Act penalty on a salaried employee who forgot to disclose foreign ESOPs. Honest mistakes with proper explanation can now be defended — but you must still file it correctly.

Here's what happened: Chennai's Income Tax Appellate Tribunal ruled that a genuine, non-wilful failure to disclose foreign ESOPs in Schedule FA does not automatically trigger a Black Money Act penalty.. The Black Money (Undisclosed Foreign Income and Assets) Act 2015 allows penalties up to ₹10 lakh per undisclosed foreign asset, even for salaried employees with company-granted stock options.. Schedule FA in your ITR requires disclosure of any foreign asset — including ESOPs, RSUs, or shares in a foreign employer's company — held even for a single day during the financial year..

What you should do: Check your ITR for Schedule FA: if you hold or vested any foreign ESOPs or RSUs this year, fill it in even if the shares were immediately sold.. File a revised ITR before the deadline (typically December 31) if you missed Schedule FA in a previous return — voluntary correction signals good faith to the tax department.. Ask your employer's payroll or stock-plan team for a year-end ESOP statement showing grant date, vesting date, number of shares, and fair market value — you need all four to fill Schedule FA correctly..

Even if your company sells the ESOP shares on the same day they vest (same-day sell), you still held a foreign asset briefly — Schedule FA disclosure is mandatory. Missing it triggers Black Money Act scrutiny, not just normal ITR penalties.