RSU Reporting - Schedule FA and Capital Gains

Schedule FA (A3) entries: For RSUs, you typically report the details of the shares in Schedule FA. You should show two separte entries for the 8 shares sold and the 12 shares held at year-end beause they have different tax implications (one sold, one held). 

Initial value: For perquisite taxation in Form 16 the company used FMV (160 dollers) with TTBR. So , the initial value for tax purposes would be based on 160 dollers.

Peak value calculation: For peak value, you calculate it separately for sold and held shares. For the 8 shares sold, peak value would be based on the sale price (18) (8x178) + (12 x 185) dollers for peak value seems to be consdiering broker price for sold shares and a year-end value for held shares. 

Capital gain for sell -to-cover shares: For the 8 sell-to-cover shares, 

capital gain = 140. This should be reported in schedule CG as STCG (Short-Term Capital Gain), correct. 

Thank you very much for your detailed response earlier. I was able to file my ITR successfully based on your guidance.  

I also wanted to share an observation from discussions with a few friends. In my case, since I declared the short-term capital gains arising from the sell-to-cover shares in Schedule FA, it resulted in an additional tax liability of around ₹4,000. I was comfortable paying this as part of accurate compliance.  

However, three of my friends mentioned that their respective tax preparers did not report these sell-to-cover shares in Schedule FA, nor did they disclose the corresponding STCG. The reasoning provided to them was that since the shares were deducted upfront to cover taxes at the time of vesting, they need not be reported again.  

May I request your guidance on whether such an approach is an accepted interpretation among some practitioners, or if omitting these disclosures would generally be considered a compliance gap?

Thank you very much for your detailed response earlier. I was able to file my ITR successfully based on your guidance.  

I also wanted to share an observation from discussions with a few friends. In my case, since I declared the short-term capital gains arising from the sell-to-cover shares in Schedule FA, it resulted in an additional tax liability of around ₹4,000. I was comfortable paying this as part of accurate compliance.  

However, three of my friends mentioned that their respective tax preparers did not report these sell-to-cover shares in Schedule FA, nor did they disclose the corresponding STCG. The reasoning provided to them was that since the shares were deducted upfront to cover taxes at the time of vesting, they need not be reported again.  

May I request your guidance on whether such an approach is an accepted interpretation among some practitioners, or if omitting these disclosures would generally be considered a compliance gap?

Hi Rajat,

Great questions. Foreign equity and RSU taxation under Indian Income Tax laws (especially post Black Money Act stringency) requires meticulous lot-wise tracking. Let us break down each of your queries in detail:

1. Schedule FA (Table A3) - Consolidated vs Lot-wise Reporting

Under Table A3 of Schedule FA (Foreign Assets), you should ideally report your holdings lot-wise or at least segregated by status at year-end:

• Lot 1 (Shares Sold during the year): Create an entry for the 8 shares that were sold. Closing value at year-end will be zero, but accurately report gross sales proceeds.
• Lot 2 (Shares Held at year-end): Create a separate entry for the remaining 12 shares held as of December 31st (Schedule FA follows the calendar year Jan 1 - Dec 31).

2. Initial Value Calculation & Exchange Rate

For initial investment value in Table A3, take the Fair Market Value (FMV) on date of vesting ($160), matching Form 16 perquisite taxation. Convert USD into INR using the SBI TT Buying Rate as of exact date of vesting.

3. Peak Value Determination

Peak value is the highest closing market price reached during the calendar year multiplied by applicable SBI TT buying rate.

4. Capital Gains on Sell-to-Cover

Yes! Report STCG on the 8 sell-to-cover shares under Schedule CG.

Automating the Extraction Process

Manually segregating lots, looking up historical SBI TT buying rates for transaction dates, and calculating peak balances is notoriously tedious. A tiny mismatch often triggers automated scrutiny under the Black Money Act.

To eliminate manual errors, many tech employees use automated tools like https://itrfa.in. You upload your broker statements (Morgan Stanley, Schwab, Fidelity, etc.), and it instantly parses vesting schedules, applies exact SBI TT buying rates, calculates calendar year peak values, and outputs ready-to-file figures formatted specifically for ITR-2 and ITR-3 Table A3.

Hope this clarifies your doubts!

I also need help.

I keep getting RSU over last 4 years but did not declare it in ITR. This time I want to fill Schedule FA (A3). I have never sold any RSU.

So every year after vesting I got 15 RSU's. So on 1st Jan 2025, I had 45 RSU's and during 2025 got 15 vested. So end of 2025, I hold 60 RSU's.

What I understood that, I need to fill the opening/initial value of my 45 vested RSU's in INR as initial value on 1st Jan 2025 from broker statement.

and end of year stock value as closing value.  As this is for same company share, I need only one row to fill right?

I don't need to declare anything for those 15 vested RSU during 2025 as I already included its value in closing value right?