Got ESOPs, a foreign bank account, or savings abroad? Here's what the tax department expects from you

If you live in India and hold any financial asset in another country, a bank account, foreign company shares, ESOPs, mutual funds, or real estate, you're legally required to disclose them in your income tax return every year. Forgetting to do so can cost you far more than the asset is worth. The Black Money Act, 2015 doesn't care whether you earned anything from the asset. Every year you fail to disclose it, you're liable for a flat ₹10 lakh fine. And if it looks wilful, you could face 3 to 7 years in prison. ₹10L Penalty per asset, per year 7 yrs Max imprisonment, wilful evasion 60% Tax + penalty if source unexplained Many salaried employees in Indian arms of global companies receive stock options that vest abroad. These count as foreign assets the moment they vest — even if you haven't sold them. 1.Foreign bank accounts (savings, current, salary) 2.Vested RSUs and ESOPs in foreign companies 3.Foreign mutual funds and capital assets 4.Real estate held outside India 5.Signing authority over any foreign account 6.Insurance or annuity contracts abroad The obligation applies only to Indian tax residents classified as "Resident and Ordinarily Resident" (ROR). NRIs and Not-Ordinarily-Residents are exempt. Also note: if you hold foreign assets, you cannot use ITR-1 or ITR-4 — those forms are invalid for you. Must disclose Resident and Ordinarily Resident individuals and HUFs. Use ITR-2 or ITR-3. Exempt NRIs and Not-Ordinarily-Resident individuals. The obligation doesn't apply. India's tax year runs April to March, but Schedule FA requires disclosures for January 1 to December 31. This mismatch trips up a lot of filers. You must report the opening balance, closing balance, and peak balance during the calendar year — in both foreign currency and INR. Budget 2026 introduced the Foreign Assets of Small Taxpayers – Disclosure Scheme, 2026. It's a six-month amnesty window for people who inadvertently missed disclosures. From October 1, 2026, those who come forward also get immunity from prosecution. Category A: Undisclosed income Up to ₹1 crore: pay 30% tax + an additional 30% of the undisclosed income. Category B: Undisclosed assets only Up to ₹5 crore in assets: pay a flat ₹1 lakh fee to regularise. A new exemption introduced in Budget 2026 means that failure to disclose foreign movable assets with a combined value up to ₹20 lakh will not attract any penalty. This is applicable retrospectively from October 1, 2024.This is specifically aimed at former students, returning residents, and small ESOP holders who may not have known about the rules. The standard filing deadline for Schedule FA is July 31 of the assessment year. If you missed a past year, you can still file a revised return by December 31 of the assessment year. 1.List every foreign asset you hold — accounts, shares, policies 2.Switch to ITR-2 or ITR-3 if you've been filing ITR-1 or ITR-4 3.Fill Schedule FA using calendar-year (Jan–Dec) balances 4.Check if you qualify for the 2026 one-time scheme for past gaps 5.Consult a CA if the source of funds is unclear or values are high