ITR-2 walkthrough for first-time RSU filers (AY 2026-27)

If you are salaried at a US-headquartered multinational with Indian payroll — Microsoft, Google, Amazon, Adobe, Nvidia, Salesforce, Meta, Apple — this is the year your tax filing graduates from a fifteen-minute ITR-1 to a multi-schedule ITR-2 exercise. The moment a single RSU vests, the filing obligation changes shape. This walkthrough covers ITR-2 for AY 2026-27 (income earned 1 April 2025 to 31 March 2026), schedule by schedule, with a fully worked Bengaluru example.

TL;DR

If you hold US RSUs as an Indian resident, you must file ITR-2 for AY 2026-27 by 31 July 2026. The schedules that matter most are Schedule S (RSU perquisite at vest), Schedule CG (capital gain on sale), Schedule OS (US dividends), Schedule FA (mandatory foreign asset disclosure), and Schedule FSI plus Schedule TR (paired with Form 67) for foreign tax credit on dividends. Use SBI TTBR for every USD-to-INR conversion.

Why ITR-2 and not ITR-1 or ITR-3

ITR-1 (Sahaja) is barred for anyone who holds any asset located outside India, has signing authority in any account outside India, or has income from any source outside India. A vested RSU share is a foreign asset; a US dividend is foreign-source income. Either one disqualifies ITR-1, regardless of value.

ITR-3 is for individuals with business or professional income. Unless you also run a side consultancy or treat F&O as business, RSUs do not push you to ITR-3 — they are capital assets, and the perquisite at vest is salary, not business income.

That leaves ITR-2 — the catch-all for individuals without business income who have capital gains, foreign assets, foreign income, more than one house property, or directorship in any company. Almost every salaried RSU holder ticks at least three boxes.

Decision tree

• Only Indian salary, one house, interest, total income up to INR 50 lakh, no foreign anything: ITR-1.
• Vested RSUs, US dividends, US capital gain, ESPP, NRI/RNOR status, or directorship: ITR-2.
• Any business or professional income: ITR-3.

For a salaried RSU holder, ITR-2 is the answer ninety-five percent of the time.

Before you start: documents you need

ITR-2 with RSUs is mostly a reconciliation exercise. Collect this before opening the utility:

1. Form 16 (Parts A and B) from your Indian employer. The RSU perquisite should sit in Part B under "Value of perquisites" with TDS already deducted in Part A.
2. Form 26AS, AIS and TIS from the e-filing portal. Cross-tally salary, TDS and dividend lines.
3. Vesting reports from your equity portal (E-Trade, Fidelity NetBenefits, Morgan Stanley Shareworks, Schwab, Computershare) — vest date, shares vested, FMV per share in USD, total perquisite, sell-to-cover shares.
4. Broker statements for 1 April 2025 to 31 March 2026 showing every sale: trade date, settlement date, shares, gross proceeds, commissions.
5. Form 1042-S for any dividend withholding — proof you attach to Form 67.
6. SBI TTBR records for every relevant date — vest dates (Rule 26 for the perquisite) and the last day of the month preceding each sale (Rule 115 for capital gains).
7. Prior-year ITR (AY 2025-26) for capital loss carry-forward and Schedule FA opening balances.
8. Bank statements for calendar year 2025 (Schedule FA is on the calendar year).
9. W-8BEN on file with your broker, so dividend withholding is 25% DTAA, not 30% statutory.

Without item 6, every other number is provisional. Build a small spreadsheet of dates and rates before opening the utility.

Schedule-by-schedule walkthrough

ITR-2 for AY 2026-27 was notified by CBDT on 30 March 2026 with a corrigendum issued on 10 April 2026 correcting figure references in Schedule CG and a handful of letter references elsewhere. The Excel utility went live on the e-filing portal in early May 2026, with the online utility following shortly after. The schedule structure below reflects the corrected form.

Schedule S — Salary

Schedule S takes the salary as per Form 16 Part B. Three lines matter:

• Gross salary — already includes the RSU perquisite if your employer ran it through payroll, which every US multinational with Indian payroll does.
• Value of perquisites under Section 17(2) — the RSU vest line. Equals FMV at vest in INR at SBI TTBR, less any amount paid for the shares (zero for RSUs).
• Profits in lieu of salary under Section 17(3) — generally zero for RSUs.

If Form 16 shows the perquisite, do not also reduce Schedule CG cost separately — that double-counts. The perquisite flows through Schedule S; the cost basis it creates is used in Schedule CG.

Schedule CG — Capital Gains

Every RSU sale lands here. The schedule splits gains into Short-Term and Long-Term, and within each, by the section governing the rate. For US RSUs:

• STCG at slab rate: holding period of 24 months or less from vest date. Reported under the residual STCG line, "From sale of assets other than at A1 to A5".
• LTCG under Section 112 at 12.5%: holding period over 24 months. The Budget 2024 rationalisation, effective for transfers on or after 23 July 2024, replaced the old 20% with indexation regime with a flat 12.5% without indexation. The Section 112A 1.25 lakh exemption does not apply — that is restricted to STT-paid Indian listed equity.

For each lot:

• Full value of consideration: sale price x shares, at SBI TTBR for the last day of the month preceding sale month (Rule 115).
• Cost of acquisition: FMV at vest, at SBI TTBR for the vest date — equal to the perquisite already taxed.
• Expenditure on transfer: broker commission, SEC/FINRA fees.

Use the lot-by-lot worksheet. Aggregating at the gross level invites a CPC notice because AIS feeds report lots individually. A common error: using grant-date FMV as cost basis. Use vest-date FMV — grant date is irrelevant once you cross the vest.

Schedule OS — Income from Other Sources

US dividends from RSU holdings are reported here as dividend income, in the row for "dividend income other than from domestic company". Enter the gross dividend in INR, before US withholding tax. The US WHT does not reduce the income — it becomes the foreign tax credit you claim later via Schedule FSI, Schedule TR and Form 67.

Interest on the cash sweep balance in your US brokerage account, if any, also goes to Schedule OS under "interest income".

Schedule FA — Foreign Assets

The schedule that catches most first-timers off-guard. Schedule FA covers the calendar year, not the fiscal year. For AY 2026-27, the reporting period is 1 January 2025 to 31 December 2025. Report every foreign asset held at any point during that window, regardless of value, regardless of whether you sold, regardless of whether income was earned.

Tables relevant to an RSU holder:

• Table A1 — Foreign Depository Accounts: the cash sweep inside your US brokerage. Peak balance, closing balance at 31 December 2025, interest credited.
• Table A2 — Foreign Custodial Accounts: the custodial account holding the shares (some brokers split depository and custodial; report per the broker's structure).
• Table A3 — Foreign Equity and Debt Interest: vested RSUs. One row per ticker — country code 2 (US, per the ITR utility's own country-code list — not ISO 840), issuer name and address, nature of interest, date of acquiring, initial value, peak value during the year, closing value at 31 December 2025, gross dividends, gross sale proceeds.

All values in INR. Use SBI TTBR — acquisition-date TTBR for initial value, peak-date TTBR for peak value, 31 December 2025 TTBR for closing value.

Skipping Schedule FA is the single most expensive error here. Under the Black Money Act, non-disclosure carries a penalty up to INR 10 lakh per assessment year, separate from any tax. The Department reconciles Schedule FA against FATCA and CRS feeds; going unnoticed is effectively impossible.

For a per-table walkthrough see Schedule FA for AY 2026-27 and use the Schedule FA helper to extract peak balances from broker CSVs.

Schedule FSI — Income from outside India and tax relief

The country-wise breakdown of foreign income on which tax has been paid abroad. For an RSU holder:

• Country code: 2 (US, per the ITR utility's own country-code list — not ISO 840).
• TIN outside India: your US ITIN, or "Not Applicable" with broker EIN if no ITIN.
• Head of income: "Other sources" for dividends; "Capital gains" only where US tax was actually paid (rare for Indian residents under DTAA Article 13).
• Income in INR: gross dividend. Tax paid outside India in INR: 25% US WHT (30% if no W-8BEN). Tax payable in India: at slab. Relief: lower of the two. DTAA article: Article 10 governs the source-state rate (25%); Article 25 is the relief article invoked in the FTC claim.

Schedule TR — Tax Relief

A one-page summary of Schedule FSI, broken down by country and by section (Section 90 for the US). For an RSU holder this collapses to one line: US, Section 90, relief equal to the lower-of cap.

This number must reconcile exactly with Form 67. Form 67 is filed separately on the e-filing portal under "e-File > Income Tax Forms" and must be furnished by 31 March 2027 under the amended Rule 128(9). File it before or alongside ITR-2 so the CPC matcher reconciles in one pass. See the Form 67 / Form 44 transition note.

Schedule TDS and Schedule TCS

Pulls from Form 26AS. For RSU holders:

• TDS by the Indian employer on salary including the RSU perquisite (26AS Part B).
• TCS under Section 206C(1G) at 20% on LRS remittances above INR 10 lakh in the year for investment / gifts / other purposes (26AS Part F). Education / medical / tour-package thresholds remain at INR 7 lakh with their own rate schedules. RSUs are received as compensation, not LRS-funded, so TCS does not arise on the vest — it arises on separate LRS purchases of additional ESPP or open-market shares.

Most lines pre-populate from 26AS; verify against payslips. Filling Schedule FSI without Schedule TR is a common slip — the utility will not stop you, but Schedule TR is what flows into the Part B-TTI tax computation.

Worked example: 200 NVDA RSUs vested, 50 sold, dividend received

Hypothetical Bengaluru-based product manager at Nvidia India, ROR, 30% slab inclusive of cess, opting for the new tax regime under Section 115BAC. All figures illustrative.

RSU events in FY 2025-26

• 15 May 2025: 100 NVDA shares vest. FMV per share on vest date: USD 130. SBI TTBR on 15 May 2025: assumed INR 86 per USD.
• 15 November 2025: 100 NVDA shares vest. FMV per share on vest date: USD 145. SBI TTBR on 15 November 2025: assumed INR 87 per USD.
• 10 February 2026: 50 NVDA shares sold from the May 2025 vest lot at USD 200 per share. SBI TTBR on 31 January 2026 (last day of the month preceding sale month, per Rule 115): assumed INR 87.50 per USD.
• 30 September 2025: US dividend received of USD 150 (rounded for the example). US withholding tax at 25%: USD 37.50. Net credited: USD 112.50. SBI TTBR on 30 September 2025: assumed INR 86.50 per USD.

Step 1 — Schedule S (Salary)

Indian base salary per Form 16 Part B: INR 35,00,000. RSU perquisite: May vest 100 x 130 x 86 = INR 11,18,000; November vest 100 x 145 x 87 = INR 12,61,500; total INR 23,79,500.

Form 16 Part B shows perquisite under Section 17(2) of INR 23,79,500 and total gross salary INR 58,79,500. TDS already deducted, in 26AS Part B. Standard deduction under Section 16: INR 75,000 (new regime). Income under "Salaries": INR 58,04,500.

Step 2 — Schedule CG

50 shares sold from the May 2025 lot. Holding period 15 May 2025 to 10 February 2026 — under 24 months — STCG at slab rate.

• Consideration: 50 x 200 x 87.50 = INR 8,75,000. Less broker fees USD 5 x 87.50 = INR 437. Net INR 8,74,563.
• Cost: 50 x 130 x 86 = INR 5,59,000 (vest-date FMV, equal to the perquisite already taxed).
• STCG: INR 3,15,563.

Enter under Schedule CG Section B, sale of foreign company shares, at slab. No Section 111A — that is reserved for STT-paid Indian listed equity.

Step 3 — Schedule OS (Other Sources)

Gross US dividend in INR: 150 x 86.50 = INR 12,975. Enter in Schedule OS under "Dividend income other than from domestic company". This is the gross figure, not net of US WHT.

Step 4 — Schedule FA

Reporting period 1 January 2025 to 31 December 2025.

Table A3 — one row for NVIDIA Corporation: country code 2 (US), address per 1042-S, nature "Direct", acquisition 15 May 2025, initial value INR 11,18,000, peak value (using the highest closing price between May and December — assume USD 175 across 200 shares at relevant TTBRs, aggregate INR 30,27,500), closing value at 31 December 2025 (assume USD 160 x 200 x 87.20 TTBR = INR 27,90,400), gross dividend INR 12,975, gross sale proceeds INR 0 (the February 2026 sale falls outside calendar 2025).

Table A1 — one row for the US brokerage cash account: country code 2 (US), account number, status "Owner", peak and closing balances, gross interest credited (often zero on sweep balances), all in INR.

Step 5 — Schedule FSI

Country code 2 (US), TIN as applicable, head "Other sources", income INR 12,975, tax paid outside India INR 3,243 (USD 37.50 x 86.50), tax payable in India at slab (30% x 12,975 = INR 3,893 before cess), relief INR 3,243 (lower of the two), DTAA Article 10 governs the source-state rate; Article 25 is the operative relief article invoked in the FTC claim (read with Section 90).

Step 6 — Schedule TR

Country 840, total foreign tax INR 3,243, total relief INR 3,243, Section 90.

Step 7 — Form 67

Filed separately before ITR-2, with Form 1042-S attached. Numbers reconcile to Schedule TR.

Step 8 — Total income

Salaries INR 58,04,500 + STCG INR 3,15,563 + Other Sources INR 12,975 = Gross Total Income INR 61,33,038. Chapter VI-A in new regime is limited (Section 80CCD(2) employer NPS, etc.); assume nil. Tax at new-regime slabs on the full INR 61,33,038 (STCG on foreign shares is slab, not 111A). FTC of INR 3,243 reduces the tax payable.

Step 9 — Cross-check

26AS Part B TDS should equal Schedule TDS. AIS will show salary and dividend (if the broker reports through the foreign-asset feed). The 50-share sale shows in AIS only if the custodian reports via FATCA/CRS; if it does not, file your computed number and keep the broker statement on record.

Common mistakes and how to avoid them

Missing Schedule FA. The most expensive error — even with everything else perfect, omission is a Black Money Act trigger.

Form 16 vs AIS mismatch. Payroll runs the RSU perquisite cleanly, but the AIS feed can lag. File from Form 16 and submit AIS feedback. Do not reduce salary to match AIS — that creates a 143(1) intimation.

Wrong residential status. ITR-2 asks for Section 6 status up front. Get this wrong and the cascade hits Schedule FA (NRIs do not file it) and the taxability of the perquisite itself (NRIs only on the India-service portion).

Grant-date instead of vest-date FMV. Cost basis is vest-date FMV, equal to the perquisite. Grant-date inflates the gain.

Wrong SBI rate. Rule 26 (vest date) for the perquisite, Rule 115 (last day of preceding month) for capital gains. Mixing them compounds across lots.

Forgetting Form 67. Schedule FSI and TR alone are not enough — CPC disallows FTC where Form 67 is missing. Several ITAT benches have called the timeline directory, but do not litigate what you can file on time.

Double-counting the perquisite. Already in Schedule S? Do not also reduce Schedule CG cost — the cost is the FMV at vest, equal to the perquisite.

Skipping the cash account in Schedule FA. The sweep balance is a Foreign Depository Account under Table A1. Reporting only equity in Table A3 is incomplete.

Calendar vs fiscal year confusion. Schedule FA is on the calendar year (1 January to 31 December 2025); every other schedule is on the fiscal year.

What to do if your AIS shows a mismatch

AIS has improved since AY 2022-23 but is still imperfect for foreign-asset and equity-compensation flows. If AIS disagrees with your Form 16 or broker statement:

1. Download AIS and the AIS Activity History from the e-filing portal.
2. Identify the specific line (employer TDS, dividend, sale of securities) where the mismatch sits.
3. Open the AIS feedback workflow and select the right option: "Information is correct", "Information is not fully correct", "Information relates to other PAN/year", "Information is duplicate", or "Information is denied".
4. If Form 16 is right and AIS is missing or low, mark "Information is correct" against your figure and file from Form 16. The feedback creates the audit trail.
5. If AIS is right and Form 16 is wrong, ask your employer to revise the TDS return and reissue Form 16 — do not unilaterally file from AIS.
6. Keep PDF copies of every screen. The Section 143(1) intimation will reference AIS data, and the feedback receipt is your push-back.

Timeline, due date and late filing under Section 234F

• 31 July 2026 — original return due date for ITR-2 for AY 2026-27 (individuals not subject to tax audit). The CBDT has historically extended this date for technical glitches; do not plan for an extension.
• 31 December 2026 — last date for a belated return under Section 139(4) with Section 234F late fee.
• 31 March 2027 — last date for Form 67 under the amended Rule 128(9). File earlier alongside the ITR.
• 31 March 2027 — assessment year ends; updated return under Section 139(8A) is the only option afterwards, with additional tax of 25% or 50% depending on filing date.

Section 234F late fee:

• INR 5,000 if filed after 31 July 2026 and before 31 December 2026, where total income exceeds INR 5 lakh.
• INR 1,000 where total income does not exceed INR 5 lakh.

In addition, Section 234A interest at 1% per month on unpaid tax runs from 1 August 2026, Section 234B interest runs on shortfall of advance tax, and Section 234C on quarterly advance-tax shortfall. RSU vests and large dividends frequently push salaried filers into advance-tax territory; if your non-salary tax liability exceeds INR 10,000 in the year, you owe advance tax in four instalments (15 June, 15 September, 15 December, 15 March). Many first-time RSU filers learn about Sections 234B and 234C only after filing.

Tools to use alongside this guide

• RSU calculator — vest-date INR perquisite and post-tax take-home using current SBI TTBR.
• US capital gains calculator — STCG/LTCG split, Section 112 12.5% computation, lot-by-lot FIFO.
• Schedule FA helper — pulls peak and closing values from a broker CSV for Table A3.

Pair this walkthrough with the complete RSU guide for Indians at US multinationals, the deeper RSU vesting tax math piece, and the step-by-step Schedule FA guide. For the foreign tax credit mechanics, the Form 67 / Form 44 transition note is the companion document.

Closing thought

ITR-2 is not difficult; it is granular. The work is in collecting the right data — Form 16, broker statements, vest reports, SBI TTBR rates, 1042-S, prior-year ITR — and walking each schedule once, in order. The schedules talk to each other: the perquisite in Schedule S becomes the cost basis in Schedule CG; the dividend in OS becomes the income line in FSI; the relief in FSI becomes the credit in TR; the credit in TR must equal Form 67. Get the data right once and the form takes care of itself. Get one number wrong and the cascade lands as a Section 143(1) intimation in October.

File by 31 July 2026, file Schedule FA without exception, and keep every document for at least seven assessment years. The Black Money Act has a sixteen-year look-back for undisclosed foreign assets — paper trails matter for longer than most filers expect.