US RSUs in Your ITR: Avoid the ₹10 Lakh Schedule FA Penalty
Your US RSUs vested last year, you never sold a single share, and you assume there's nothing to report. That assumption is exactly what turns a routine return into a ₹10 lakh problem. For salaried professionals at MNCs and US-headquartered firms, the real risk this filing season isn't your capital gains — it's Schedule FA, the foreign-asset disclosure most people skip.
Summary
| Item | Rule for AY 2026-27 (filing FY 2025-26) | Why it matters |
|---|---|---|
| Reporting period | Calendar year 1 Jan – 31 Dec 2025 | Wrong if you use the March year-end statement |
| ITR form | ITR-2 | ITR-1 cannot report foreign assets |
| Vested, unsold RSUs | Schedule FA, Table A3 | Mandatory even if you sold nothing |
| Foreign cash / bank accounts | Schedule FA, Table A2 | The brokerage account itself is an asset |
| US dividends | Schedule FSI + Schedule TR + Form 67 | Recovers the 25% US withholding via DTAA |
| Non-disclosure penalty | Flat ₹10 lakh per year | Ignores asset size (₹20 lakh relief aside) |
| Already filed? | Revised return u/s 139(5), by 31 Dec 2026 | Beats waiting for a notice |
Why Schedule FA, not your capital gains, is the trap
The calendar-year mismatch
Schedule FA for AY 2026-27 asks for foreign assets held at any time during the calendar year ending 31 December 2025 — January to December, not April to March. Pull your March 2026 brokerage statement and your figures are wrong before you start. Download the calendar-2025 statement from Schwab, Morgan Stanley or E*Trade and read off the peak balance, the closing balance, and the cost — those are the three numbers Schedule FA wants for each holding.
Vested but unsold still counts
Unvested RSUs are not yet your asset — leave them out. The moment they vest, you own foreign shares, and they belong in Schedule FA, Table A3 (equity interest) even if you never sell. This is the single most common omission. Use the vesting date as the acquisition date and the perquisite value already sitting in your Form 16 as the cost. ESPP shares work the same way — the discounted purchase is a perquisite, and the holding is reportable from the day it lands in your account.
Your foreign accounts count too
The brokerage account that holds those shares is itself a foreign asset. The cash balance at Schwab or E*Trade goes in Table A2 (financial interest), and any foreign bank account — including a dormant one left over from an overseas posting — goes in the foreign-bank table with its peak balance for calendar 2025. Signing authority on an employer or joint account counts as well. Report the shares but miss the account, and the same ₹10 lakh penalty still applies.
The ₹10 lakh number that ignores asset size
Under the Black Money Act, failing to disclose a foreign asset is a flat ₹10 lakh penalty per assessment year — it does not scale with value. A ₹2 lakh unsold RSU lot left out carries the same exposure as a ₹2 crore one. A 2024 relaxation spares movable foreign assets totalling ₹20 lakh or less in the year, but a single larger grant — or any foreign bank or brokerage account — puts you back in scope, and willful evasion adds prosecution.
Get the income side right too
Capital gains on shares you did sell
Shares you sold are taxable in India regardless of how the US treated them. Gains on units held over 24 months are long-term at 12.5% (after 23 July 2024); shorter holdings are taxed at your slab rate. The ₹1.25 lakh LTCG exemption for Indian listed shares does not apply to foreign stocks. Convert each transaction at the SBI TT buying rate on the relevant date.
Dividends and the 25% US withholding
US dividends reach you after a 25% withholding (with Form W-8BEN on file). Report the gross dividend in Schedule FSI, claim the US tax in Schedule TR, and file Form 67 before you submit your ITR as the proof that unlocks the credit under the India-US DTAA. All three must agree; miss Form 67 and you pay tax on the same dividend twice.
Real example: Salaried, ₹38L CTC, Bengaluru, US tech MNC
Priya holds 60 vested RSUs she has never sold, sold ESPP shares for a ₹25,500 gain, and earned ₹15,300 in US dividends.
| Item | Skip Schedule FA | Report correctly |
|---|---|---|
| Capital gains tax (ESPP, slab) | ₹7,650 (still owed) | ₹7,650 |
| Net dividend tax after Form 67 credit | ₹765 | ₹765 |
| Black Money Act penalty exposure | ₹10,00,000 | ₹0 |
| Time to comply | — | ~90 minutes |
Her tax bill is identical either way. The only thing that changes is a ₹10 lakh penalty versus ninety minutes of disclosure.
What to do this week
- Download your foreign brokerage and ESPP statements for calendar year 2025 (Jan–Dec), not the financial year.
- List every vested RSU and ESPP lot — sold or not — for Schedule FA Table A3, and the brokerage cash balance for Table A2.
- File Form 67 for the US dividend and withholding credit before you submit ITR-2.
- Already filed without Schedule FA? File a revised return under Section 139(5) by 31 December 2026, before a notice forces ITR-U and extra tax.
Disclose now, not after the notice
Foreign-account data flows to the tax department automatically under FATCA and CRS, so an omission gets found, not overlooked. The fix costs an evening; the penalty costs ₹10 lakh and a Black Money Act file. If you hold any US RSUs, ESPP or foreign stock, treat Schedule FA as the non-negotiable part of this year's return.
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