Schedule FA: Report US RSUs in ITR or Face ₹10 Lakh Penalty
If you draw a ₹15L+ salary at an Indian arm of a US-listed company, your vested RSUs, ESPP shares and the brokerage account holding them are foreign assets. The income-tax department already knows they exist — it receives your account data automatically from foreign tax authorities under the CRS and FATCA exchange. Leaving them out of Schedule FA in your AY 2026-27 return is not a small omission; it triggers a flat ₹10 lakh penalty under the Black Money Act, regardless of how much tax you actually owe. Here is exactly what to report, where, and by when.
Summary
| What you hold | Schedule FA table | What to disclose |
|---|---|---|
| Foreign bank account (salary/dividend sweep) | A1 — Depository | Peak & closing balance |
| Brokerage account (E*TRADE, Schwab, Fidelity) | A2 — Custodial | Peak & closing balance |
| Vested RSUs, ESPP shares, direct US stocks | A3 — Equity/Debt | Cost, peak value, closing value, income |
| Dividends received on US stocks | A3 + Schedule OS | Gross dividend, even if reinvested |
| Capital gains on shares sold | Schedule CG | Sale proceeds and gain |
The trap: all of Schedule FA is reported for the calendar year — 1 January to 31 December 2025 — not the financial year 2025-26. Most salaried filers carry over their April–March mindset and report the wrong window. Income from these assets still goes in the FY 2025-26 schedules; only Schedule FA flips to the calendar year.
Who must file Schedule FA
Schedule FA is mandatory for every individual who is Resident and Ordinarily Resident (ROR) and held any foreign asset at any time during the calendar year. There is no monetary threshold for disclosure — a single unsold RSU worth ₹40,000 must be reported. Because Schedule FA exists only in ITR-2 and ITR-3, you cannot use ITR-1 or ITR-4 the moment you hold a foreign asset, even if your only income is salary.
If you became a resident only partway through FY 2025-26 (a returning NRI), you report assets from the date your residency triggered ROR status — not the full year.
The four entries most ₹15L+ earners miss
Vested but unsold RSUs — Table A3
The day RSUs vest, you own foreign equity. Report each lot in Table A3: initial value (the cost/perquisite value already taxed in your salary), peak value during 2025, closing value as on 31 December 2025, and any income. Unvested RSUs are not reported — you do not own them yet.
ESPP shares — Table A3
Shares bought through an Employee Stock Purchase Plan are foreign equity exactly like RSUs. The discount you received was already taxed as a perquisite; the shares themselves still need a Table A3 line. Filers routinely report RSUs but forget the ESPP lot sitting in the same account.
The brokerage cash account — Table A2
Your E*TRADE or Schwab account is a custodial account and gets its own Table A2 entry — separate from the shares inside it. Report the peak and closing balance of the cash, including un-swept dividend money. Reporting the shares but not the account is one of the most common "inaccurate particulars" errors.
Dividends — even when reinvested
US dividends are taxable in India in the year received and belong in Schedule OS, with the 25% US withholding claimed back as foreign tax credit in Schedule TR (file Form 67 before your return). Reinvested dividends are still "received" — they do not escape disclosure.
Convert with SBI TTBR — nothing else
Every rupee figure in Schedule FA must use the State Bank of India Telegraphic Transfer Buying Rate (TTBR) — not the Google rate, the RBI reference rate, your broker's rate or the credit-card rate. Use the TTBR on the acquisition date for cost, on the peak date for peak value, and on 31 December 2025 for the closing value. A wrong rate is treated as inaccurate disclosure, which carries the same penalty as non-disclosure.
Real example: Product Manager, ₹34L CTC, Bengaluru
| Item | Detail |
|---|---|
| Vested RSUs held on 31 Dec 2025 | 120 shares, closing value ₹18.4 lakh → Table A3 |
| ESPP lot | 30 shares, cost ₹3.1 lakh → Table A3 |
| Schwab cash balance | Peak ₹1.2 lakh, closing ₹0.7 lakh → Table A2 |
| 2025 dividends | ₹46,000 gross, ₹11,500 US tax withheld → Schedule OS + Form 67 |
| If left out of Schedule FA | ₹10 lakh penalty under Section 43, plus notice |
This filer owes almost no extra tax — the perquisite was taxed at vesting and the dividend credit offsets most of the US withholding. The entire ₹10 lakh exposure is a disclosure failure, not a tax failure. That is what makes Schedule FA so dangerous: the penalty has nothing to do with how much you earned.
What the penalty actually looks like
Under the Black Money Act: Section 42 (failure to furnish the return) and Section 43 (failure to disclose a foreign asset, or filing inaccurate particulars) each carry a flat ₹10 lakh penalty per assessment year. Section 41 — for genuinely undisclosed foreign income — adds tax at 30% plus a penalty of three times that tax. The Finance (No. 2) Act, 2024 added a relief: the ₹10 lakh penalty under Sections 42 and 43 does not apply where the aggregate value of movable foreign assets stays at or below ₹20 lakh in the year. Treat this as a narrow safety net, not a licence to skip filing — most ₹15L+ earners with multi-year RSU vesting cross ₹20 lakh quickly, and immovable property is excluded entirely.
What to do this week
- Pull your foreign brokerage's 2025 calendar-year statement and list every lot vested or bought on or before 31 December 2025.
- Map each holding to its table — A1 for the bank account, A2 for the brokerage cash, A3 for the shares — and convert every figure using SBI TTBR.
- File Form 67 before you submit the return to claim the US tax credit on dividends and any capital gains.
- File ITR-2 by 31 July 2026; a late return adds a ₹5,000 fee under Section 234F and removes your option to revise comfortably if a CRS-matched notice lands.
Don't let a disclosure miss cost you ₹10 lakh
Schedule FA is the one part of your return where the penalty is fixed and brutal even when the tax is zero. Get the calendar-year window, the table mapping and the TTBR conversion right, and the whole thing is a 20-minute job. Get it wrong and a notice follows the data the department already holds.
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