Unvested RSU on Schedule FA: Reportable or Not? Peak Balance Rule for Indian Residents
Unvested RSUs have no specific CBDT guidance for Schedule FA — the conservative approach is to disclose them as a foreign asset at nil value. Vested but unsold shares must be reported with acquisition date, cost, and peak value. Non-disclosure attracts a ₹10 lakh penalty per asset per year under the Black Money Act.
Harun Raaj
Chartered Accountant · Harun Raaj & Associates
Short answer: Schedule FA (Foreign Assets) is mandatory for resident and ordinarily resident (ROR) individuals who hold any foreign asset during the financial year. For unvested RSUs there is no specific CBDT guidance; since you do not yet own the shares — the employer holds them in trust — the conservative approach is to disclose them as a foreign/beneficial interest at nil value. Vested but unsold shares are clearly reportable: list each lot with acquisition date, cost, and peak value during the year. Non-disclosure carries a ₹10 lakh penalty per unreported asset per year under s.43 of the Black Money Act, 2015 — far more expensive than a cautious disclosure.
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Who must file Schedule FA
Schedule FA is part of the ITR (ITR-2, ITR-3, etc.) and applies to:
- Resident and ordinarily resident (ROR) individuals;
- Who hold any foreign asset at any time in the financial year — even if it earns no income and even if it is sold before year-end.
A Resident but Not Ordinarily Resident (RNOR) is generally not required to disclose assets acquired while non-resident, but gains from them remain taxable. Know your residency status before you decide what to disclose.
The vested vs unvested split
The peak-balance rule
For each foreign asset, Schedule FA asks for the peak value during the year — the highest balance/value the asset reached at any point between 1 April and 31 March — converted to INR at the relevant exchange rate. For shares:
- Part B (foreign equity interest): company, ISIN, country, date of acquisition, initial cost (FMV at vest), and peak value during the year.
- Part A2 (custodial account): the US brokerage (E*TRADE, Schwab, etc.), account number, and peak balance during the year.
People under-disclose by reporting only the year-end value. The peak is the number the form asks for — use it.
Worked example: Sneha's disclosure
Persona: Sneha, ROR, FY 2025-26. RSU grants: 200 vested shares held in Schwab (cost ₹4,00,000; peak value ₹4,60,000), 100 shares sold mid-year (gain ₹60,000), and 300 unvested RSUs in the grant portal.
What she files in Schedule FA:
- Part A2: Schwab account — account number, country US, peak balance ₹4,60,000.
- Part B (vested, held): 200 shares — acquisition date, cost ₹4,00,000, peak value ₹4,60,000.
- Part B (vested, sold): 100 shares — disclosed, with the ₹60,000 sale gain shown as income derived from the asset.
- Unvested RSUs: conservative disclosure as a foreign/beneficial interest at nil value — with a note that the shares are unvested and held by the employer.
What the penalty would be if she omitted them: if the 200 vested shares were omitted, the exposure is ₹10,00,000 per year per asset under s.43 of the Black Money Act — not a percentage, a flat penalty per undisclosed asset. Even one omitted asset outweighs the effort of a full disclosure.
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How to fill the Schedule FA rows
Schedule FA asks for specific columns, not a paragraph. For each vested foreign asset:
- Part A2 (custodial account): broker name (E*TRADE, Schwab, Fidelity), country US, account number, and the peak balance during the year in INR;
- Part B (foreign equity): company name, ISIN or CUSIP, country of incorporation, date of acquisition (vest date), initial value in INR (FMV at vest), and peak value in INR during the year;
- Income derived: for shares sold, enter the sale proceeds/gain in the relevant income schedule and cross-link it to the Schedule FA disclosure.
Use the TT buying / RBI reference rate for the conversion and keep the rate note with your papers, because the AO may ask how each INR figure was derived.
The trust angle for unvested RSUs
The reason unvested RSUs are ambiguous is ownership: you do not yet own the shares. The employer's broker or a third-party trust holds them, and your right to them is conditional on continued employment and a vesting date. A strict reading says an asset you do not own cannot go in Part B. The conservative position — disclose as a foreign/beneficial interest at nil value — costs nothing and eliminates the ₹10 lakh-per-asset exposure under the Black Money Act if the department later disagrees. Disclose, note "unvested — held by employer trust," and move on.
Frequently Asked Questions
1. Do I have to report unvested RSUs in Schedule FA?
There is no specific CBDT guidance on unvested RSUs. The conservative approach is to disclose them as a foreign/beneficial interest at nil value — disclosure is safe; non-disclosure risks a penalty.
2. What is the peak-balance rule for foreign shares?
Report the highest value the asset reached during the financial year, converted to INR — not just the year-end balance. The form explicitly asks for peak value.
3. I sold my RSUs during the year. Do I still report them?
Yes. Schedule FA requires disclosure of assets held at any time in the year, and the sale proceeds/gain are reported as income derived from the asset.
4. What is the penalty for not disclosing a foreign asset?
₹10 lakh per unreported asset per year under s.43 of the Black Money Act, 2015. It is a flat penalty, not a percentage of the asset value.
5. Does Schedule FA apply to RNOR individuals?
Generally no for assets acquired while non-resident, but the income from them is still taxable, and RNOR status has a time limit. Confirm your residency status before filing.
6. What exchange rate do I use for Schedule FA values?
Convert at the exchange rate applicable for the relevant date (RBI reference / TT buying rate). Use a defensible rate and keep the calculation note with your papers.
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Disclose conservatively, avoid the ₹10L penalty
If in doubt, disclose. Use the Schedule FA Assistant to list each foreign asset — account, shares, acquisition date, cost, and peak value — and get a Schedule FA-ready summary for your ITR before the due date.
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Last verified: 2026-08-08.
Sources: ITR-2/ITR-3 Schedule FA (Foreign Assets); Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 (s.43); CBDT instructions on Schedule FA; Income-tax Rules, 1962 (Rule 114F for the foreign-asset rules).
Reviewer: pending CA sign-off. Draft status — do not publish before CA review.: reporting of unvested RSUs (no specific CBDT guidance).
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See Also
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