Correctly disclosed your RSUs and foreign assets in your ITR?
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The full scope of ITR compliance for Indian RSU holders
Schedule FA is a single-purpose form: tell the Income Tax Department that you held foreign assets. No tax is computed in it. But for RSU holders, it is just the starting point.
A complete ITR filing for someone with foreign equity requires six separate documents, each covering a different aspect of your position.
The filing vehicle for all of this is ITR-2 or ITR-3. ITR-1 is off the table the moment you hold a foreign asset — regardless of income level.
These six documents don't operate independently. The income figure in Schedule FSI must match Schedule OS. The foreign tax claimed in Form 67 must reconcile with Schedule TR. The shares reported in Schedule FA must be consistent with the lots in Schedule CG. Any discrepancy is a common trigger for automated demand notices from the CPC.
Schedule FA runs on Calendar Year — not India's Financial Year
Held shares in January 2025 and sold them by August? You still need to report them for AY 2026–27. The schedule asks whether you held the asset at any point between January 1 and December 31, 2025 — regardless of whether you sold them.
This is a common source of confusion among most taxpayers — two different calendars operating simultaneously within a single return.
The penalty for non-disclosure
Finance Act 2024 (effective Oct 1, 2024): if total movable foreign assets fall below ₹20 lakh, the ₹10 lakh penalty won't be levied. The reporting obligation itself is unchanged.
Most cases of non-compliance aren't wilful. RSU taxation spans domestic income tax, international DTAA provisions, and FEMA obligations simultaneously — very few generalist CAs have depth across all three.
The required schedules appear in the ITR forms and the rules are publicly accessible. What's far less accessible is the working knowledge of how they interact in practice: the calendar year distinction that governs Schedule FA, the sequencing requirement for Form 67, the lot-by-lot FIFO reconstruction needed when shares from multiple vesting dates are sold together. The required computation of peak and closing value, and the SBI TT buying rate as the prescribed exchange rate for all conversions to INR, all add layers of complexity that take time to understand and implement correctly.
In Depth
Understanding each schedule
RSU holders typically need to complete two tables within Schedule FA:
Table A2 — Foreign custodial accounts
Your brokerage account (Fidelity, Schwab, Morgan Stanley, etc.) is a foreign custodial account and must be reported here. Provide the account number, financial institution name, country, and the peak and closing balance during the year.
Table A3 — Investments in foreign equity or debt
Each company whose shares you hold is a separate entry. You provide the company name, country of incorporation, registered address, and date of acquisition.
For each equity holding in Table A3, you report the following INR values — all computed using the SBI Telegraphic Transfer Buying Rate on the relevant date:
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Initial value
Value at the start of the year, or the date of acquisition if acquired during the year
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Peak value
Highest value at any point during the year
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Closing value
Value on December 31
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Total gross amount paid/credited
Dividends or other credits received during the year
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Total gross proceeds from sale/redemption
Proceeds from any shares sold during the year
Peak and closing serve different purposes. Peak reflects maximum exposure at any point during the year. Closing reflects what remained on December 31. A taxpayer who held 300 shares in February 2025 and sold all of them by September reports a peak value and a closing value of zero — and is still required to file Schedule FA.
The SBI Telegraphic Transfer Buying Rate is a specific published rate — not the exchange rate on the date you received the shares, and not the rate your broker used for any transactions. The SBI TT rate is available from the SBI website and is the prescribed rate for this purpose under the ITR rules.
Schedule FSI is used to declare all income received from outside India during the financial year — dividends, interest, capital gains, salary, or proceeds from the sale of foreign property. If you paid taxes in that foreign country on the same income, you declare those taxes here to claim DTAA relief, depending on India's agreement with that country.
Schedule FSI
Country-by-country breakdown of all foreign source income and the foreign taxes paid on it. This initiates the double-taxation relief process under the applicable DTAA.
Schedule OS
Dividend and interest income from foreign sources is declared here as Income from Other Sources. Capital gains from foreign equity sales go into Schedule CG — not Schedule OS.
US example: The US withholds tax on dividends paid to non-US investors — typically 25%, reducible to 15% under the India-US DTAA for qualifying taxpayers. You declare this withholding in Schedule FSI and claim it as a credit against the Indian tax on the same dividend, so you are not taxed twice on the same income.
RSU shares from US employers are treated as unlisted securities — they trade on US exchanges, not Indian ones, and no STT is paid. This affects how gains are classified:
Exchange rate: All gains are computed in INR using the SBI TT Buying Rate on the last day of the month before the sale. A sale on August 15, 2025 uses the July 31, 2025 rate.
Cost of acquisition: Your cost is the fair market value of the shares on the vesting date — the same figure that appeared as perquisite income in your Form 16 and was taxed as salary. It is not what you "paid" (RSUs have no purchase price); it is the closing market price on the vesting date, converted to INR at the SBI TT Buying Rate for that date.
Multiple lots and FIFO: When shares from different vesting dates are sold together, the earliest-vested shares are treated as sold first. If you vest 100 shares in 2022 and 100 shares in 2024, and you sell 100 shares in 2025, FIFO treats the 2022 lot as the one sold — which may qualify as long-term (held over 24 months) while the 2024 lot would be short-term. The holding period and cost are computed separately for each lot.
Sell-to-cover transactions at vesting — where the broker sells a portion of shares to fund TDS — are also disposals and must appear in Schedule CG. The gain is typically nominal since the sale occurs at or near the vesting price.
The ₹1.25 lakh LTCG exemption that applies to listed Indian equity does not extend to foreign shares.
Form 67 is your formal claim for Foreign Tax Credit — the mechanism that prevents the same income from being taxed twice.
Critical: the filing sequence
- File Form 67 on the Income Tax e-filing portal
- Then file your ITR
The CPC verifies whether Form 67 is on record at the time your return is processed. File it after your ITR — even within the permitted window — and your credit will likely be auto-rejected.
For each country where tax was paid, you provide the nature of income, the foreign tax paid, and the INR equivalent using the TT rate on the date of payment. For US dividend withholding, the source document is your Form 1099-DIV from the broker — this shows the gross dividend and the tax withheld.
The Foreign Tax Credit you can claim is capped at the Indian income tax payable on the same income. If the US withheld 25% but your Indian slab rate on that dividend is lower, you can only claim credit up to the Indian liability — the excess is not refundable.
Schedule TR records the tax relief granted under the applicable Double Taxation Avoidance Agreement. The credit computed in Form 67 flows directly here. For each entry, you specify the country, the head of income, the tax paid abroad, and the credit actually applied.
Under the India-US DTAA, relief is provided under the credit method: both countries retain the right to tax the income, but India credits the US tax paid against its own tax on the same income. This is different from the exemption method, where the income would be excluded from Indian tax entirely. For taxpayers with foreign equity, the credit method is the applicable one.
For countries with which India has no DTAA — less common for RSU holders, but relevant for some ESOP grants from non-US companies — unilateral relief under Section 91 of the Income Tax Act applies instead, on broadly similar terms.
ESPP shares follow the same rules as RSU shares for Schedule FA and Schedule CG. The purchase discount is taxed as salary income by the employer at the time of purchase; the cost of acquisition for subsequent capital gains purposes is the fair market value at the time of purchase — not the discounted price you paid. Dividends on ESPP shares are treated identically to dividends on RSU shares.
Frequently asked questions
TDS at vesting discharges the salary tax on the perquisite — the fair market value of shares on the vesting date, treated as employment income under Section 17(2)(vi). It has no bearing on the separate obligations that arise from holding those shares as a foreign asset.
Schedule FA, Schedule FSI, and Form 67 are each triggered by different conditions and are legally independent of each other and of TDS.
The Income Tax Appellate Tribunal has upheld Black Money Act penalties against taxpayers who paid all income tax correctly but omitted the Schedule FA disclosure — the two requirements are entirely distinct in law.
File a revised return before December 31, 2026 (the revision deadline for AY 2026–27). A revised return replaces the original in its entirety — include Schedule FA with complete foreign holding details.
If the revision window is already closed, the FAST-DS 2026 scheme provides a regularisation route for taxpayers who paid tax on the underlying income. Acting before the department initiates proceedings carries materially lower risk.
Yes — the disclosure obligation applies at any value. The Finance Act 2024 amendment provides that if your total movable foreign assets fall below ₹20 lakh, the ₹10 lakh penalty won't be levied for non-disclosure.
The obligation to disclose is unaffected. The penalty provision and the reporting requirement are legally distinct.
Yes. ESPP shares from a foreign employer are foreign equity holdings — reported in Table A3 alongside RSU shares, with the same calendar year reporting window. The fact that the purchase discount was taxed as a perquisite at acquisition doesn't reduce or displace the ongoing asset disclosure requirement.
The two obligations are separate: the perquisite tax settled the income event at purchase; Schedule FA is the ongoing asset disclosure for every year you continue to hold the shares as a resident taxpayer.
Possibly. Schedule FA applies only to taxpayers who are Resident and Ordinarily Resident in India under Section 6 of the Income Tax Act. If you spent fewer than 182 days in India during FY 2025–26, you may qualify as a Non-Resident or RNOR — in either case, Schedule FA may not apply. Determine your status from a precise day count before assuming one way or the other.
Yes. Schedule FA is a disclosure of assets held — not income from a current employer. The obligation continues every year you hold the shares and remain Resident and Ordinarily Resident. It ends when you sell or when your residential status changes.
Revised returns can be filed for any assessment year still within the revision window.
For years where that window has closed: the FAST-DS 2026 scheme provides regularisation for taxpayers who paid income tax on the foreign income but omitted the disclosure — a flat compounding fee applies. Taxpayers who neither paid tax nor disclosed face the full Black Money Act provisions.
In all cases, voluntary action before the department initiates proceedings carries significantly lower risk.
Filing deadline: July 31, 2026
Start early. Broker statements, exchange rates, and Form 67 all take time.
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