Subodh works for an MNC and as part of his performance appraisals, he was granted shares of Company as ESOPs and the shares have been vested. He had missed to declare the ESOPs in his ITR. He has been seeing multiple messages in news and from tax department reiterating the importance of disclosure of Foreign Assets. What are the options available for Subodh?

ESOP Reporting

The Income tax Law in India expects an assessee who is “Resident” in India, to declare his/her global income in the ITR and disclose Foreign Assets under schedule FA of the ITR Form. ESOPs and RSUs have been a very common tool used by MNCs to retain talent for a longer period. These ESOP shares are held in a Foreign Demat account of the assessee.

FATCA & CRS

Foreign Assets like ESOPs and RSUs go unreported in ITR dues to an illusion that the IT department may not have access to the data such as the dividends, capital gains and flow of money into bank accounts. The Foreign Account Tax Compliance Act (FATCA) was enacted into law in 2010, in the United States. The primary purpose of FATCA is to combat tax evasion by U.S. persons using offshore accounts and to promote transparency in the global financial services sector. India agreed to cooperate with the U.S. government to facilitate the automatic exchange of financial information by signing Inter-Governmental Agreement (IGA) with the U.S. to implement its provisions locally. For non-US countries, Common Reporting Standards (CRS) is in place and replicates the role of FATCA.

IT Department’s polite warning

Armed with information available through FATCA and CRS, the IT department, as part of its second phase of the NUDGE campaign, has been sending warnings to assessees through SMS and emails urging them to disclose their foreign assets and income through revised returns before 31st Dec 2025. As per recent news article from the Economic Times, It has also been pushing the MNC employers to alert its employees on reporting foreign assets and foreign sourced income.

Consequences

Failure to report foreign assets and income may trigger assessment proceedings, a fine of Rs. 10 Lakhs and also prosecution under the Black Money Law.

What can you do:

The IT department, through the mail and SMS reminders have provided a window to tax payers to file revised returns by 31st Dec 2025 to update foreign assets and income and pay the corresponding taxes.

How can we help you?

Various clauses from the Income Tax Act may be simplified in online contents. But most of the time, it requires professional help in identifying suitable route for specific instances. Similar to nurturing and taking care of personal health, it is important to also keep a tab on one’s financial health. We at Chockalingam Unnamalai & Associates, can help you understand the pros and cons of various choices you make in the context of personal taxation. You can bank on us for a stress free tax filing and related compliances.

Call us at +91 73050 56628 or drop a mail to frontoffice@onesourcevault.com

  • Can paying off your home loan help you save capital gain tax?

    Can paying off your home loan help you save capital gain tax?

    Raju Rastogi is a an employee with an MNC with a handsome salary. He visited and celebrated the new year with his close friend Farhan Qureshi in Dubai. When he was in Dubai, he had identified a flat in Dubai and after much discussions, decided to purchase it as an investment. Since the flat booking…

  • Paying booking advance through a friend in Dubai for a flat purchase risks FEMA violation!

    Paying booking advance through a friend in Dubai for a flat purchase risks FEMA violation!

    Raju Rastogi is a an employee with an MNC with a handsome salary. He visited and celebrated the new year with his close friend Farhan Qureshi in Dubai. When he was in Dubai, he had identified a flat in Dubai and after much discussions, decided to purchase it as an investment. Since the flat booking…

  • Not disclosed foreign assets in ITR? Can you take corrective action?

    Not disclosed foreign assets in ITR? Can you take corrective action?

    Subodh works for an MNC and as part of his performance appraisals, he was granted shares of Company as ESOPs and the shares have been vested. He had missed to declare the ESOPs in his ITR. He has been seeing multiple messages in news and from tax department reiterating the importance of disclosure of Foreign…

CA Chockalingam K
Latest posts by CA Chockalingam K (see all)