How should I declare my overseas restricted stock units in ITR?

Mahesh Nayak, chartered accountant, CNK & Associates.

I have received an email from the tax department that I hold foreign assets in the calendar year 2024 that I have not disclosed. Probably, the department is referring to the restricted stock units (RSUs) I was allotted when I worked for a big tech company in the US from 2018-2022. I have to revise my ITR. How should I declare these in ITR and should I declare the current value or the value at which I was allotted the stocks? What other information should I gather that must be declared?

Assuming that you are a resident and ordinarily resident for FY 2024-25, you would need to disclose the foreign assets held by you in the tax return, even if such assets were acquired by you when you were a non-resident. As the stocks are already allotted to you on vesting of the RSUs, you would need to disclose the stocks in Table B of Schedule FA in the return. Table B requires disclosure of financial interest held in any entity at any time during the calendar year 2024.

In the table, you would need to disclose for calendar year 2024, the country name and code, zip code, nature of entity (company), name and address of the entity, nature of interest (legal owner), date since held, total investment (at cost in equivalent rupees), income accrued from such interest during the calendar year, nature of income, income offered in the return of income along with the schedule and item number of the schedule where such income is offered.

In case you have earned any dividend out of the shares held during the calendar year, you should disclose the same as well as the schedule in which such dividend is offered to tax in the return of income (Schedule OS in the case of dividends). The income accrued from such interest (Column 8 in Table B) has to be disclosed for the calendar year 2024, whereas the income offered in the return (Column 10) has to be disclosed for the financial year 2024-25.

As Table B only requires the cost to be disclosed, you need not disclose the current value of the shares held. For the income to be offered to tax in the return of income, the exchange rate to be used for conversion is the SBI TT buying rate on the last date of the month preceding the month of receipt of the dividend.

Typically, when RSUs are vested, the employer sells part of the entitlement to pay the tax applicable in the US. If such vesting and sale have happened during the year, as a resident and ordinarily resident, you would need to offer to tax the gross value of the entitlement on exercise and also capital gains on the sale of the shares undertaken by the employer to meet the tax dues in the US. If such income is taxable in India, you are also eligible for the foreign tax credit for any taxes paid in the US. The taxable income, along with the taxes paid in the US, would need to be disclosed in Schedule FSI in the income tax return, in addition to the disclosure of the stocks in Schedule FA.

If you have missed disclosing the asset or the income for FY 2024-25, you may file a revised return of income, making such disclosure or offering the income to tax, before 31 December 2025.