Schedule FA Treatment for acquistion

Great question about how to reflect these acquisition-related payouts in Schedule FA (Foreign Assets) of your ITR, especially for ESPP shares listed in the US.

Let's break down the two payouts and how they fit into Schedule FA columns (A3):

Context:

• You held shares of a US company (ESPP) previously reported in Schedule FA.

• The company was acquired in the current year, resulting in:

  1. Cash dividend for every 0.5 shares held on acquisition date

  2. Shares of the acquiring company in ratio 0.5 per 1 share held, after dividend

How to report in Schedule FA columns (A3):

Additional notes:

• The cash dividend received due to acquisition is taxable income and should be reported in the income heads separately (like income from other sources) but also reflected in column 11 as gross amount credited.

• The shares received from acquiring company are considered a new foreign asset and their value should be reflected as closing balance (column 10).

• The original shares are deemed extinguished after acquisition, so closing balance for the original shares is zero.

• If any shares were sold/redeemed during the year, report proceeds in column 12.

Summary Table: