F&O Trading and Income Tax: A Complete Guide for Traders Understanding tax treatment, audit applicability, turnover computation and ITR disclosure for Futures & Options income — AY 2026-27 If you trade in the derivatives (Futures & Options) segment, the good news is that Indian tax law treats this activity clearly and consistently as business income — not as some grey area you need to worry about. Once you understand a handful of core rules, F&O taxation becomes very manageable, even if you have never filed a business return before. This guide walks you through everything you need: what F&O is, how it is taxed, when a tax audit applies, how to calculate turnover and profit correctly, the accounting treatment, tax computation, loss set-off rules, and exactly how to disclose it all in your ITR. 1. What is F&O Trading? Futures and Options (F&O) are derivative instruments whose value is derived from an underlying asset — typically a stock index or an individual stock. A future is a standardised contract to buy or sell the underlying at a predetermined price on a future date. An option gives the buyer the right, but not the obligation, to buy (call) or sell (put) the underlying at a fixed strike price before expiry, in exchange for a premium. F&O contracts are cash-settled in India and are used both for hedging existing positions and for speculating on price movements. Because they are traded on recognised stock exchanges (NSE/BSE) through a broker, and settlement happens without actual delivery of the underlying shares, the Income-tax Act carves out specific — and favourable — treatment for them. 2. Tax Treatment of F&O Income This is the single most important thing to get right: F&O transactions are specifically excluded from the definition of a ‘speculative transaction’ under the proviso to Section 43(5) of the Income-tax Act, because they are executed on a recognised stock exchange. As a result, income or loss from F&O trading is taxed as Profits and Gains of Business or Profession (PGBP) under the head ‘Non-Speculative Business Income’. This single classification carries several practical benefits for you as a trader: Taxed at your normal slab rate — there is no separate concessional rate as with capital gains. Full deduction is allowed for genuine business expenses — brokerage, STT, exchange transaction charges, internet and data charges, advisory fees, and a proportionate share of rent, telephone or salary if directly attributable to trading. A loss can be set off against almost any other head of income (except salary) in the same year, and carried forward for 8 assessment years. It is reported in ITR-3 (or ITR-4 if presumptive taxation is validly opted for), not in the capital gains schedule. Good to know • F&O is non-speculative, unlike intraday equity trading (which remains speculative business income under Section 43(5)). • Because it is non-speculative, F&O losses enjoy a much wider set-off window than intraday losses. 3. Tax Audit Applicability (Section 44AB) Many traders assume a tax audit is triggered only by very high turnover. In practice, the audit trigger for F&O depends on three separate tests, and it pays to check all three every year. 3.1 Turnover-based trigger Audit is mandatory once F&O turnover exceeds ₹10 crore, provided at least 95% of receipts and payments (by value) are through digital/banking channels — which is the norm for exchange-settled F&O, since brokers route funds through the bank. If the 95% digital condition is not met, the threshold drops sharply to ₹1 crore. 3.2 Presumptive taxation opt-out / low profit trigger If you declare profit below the prescribed presumptive rate (6% of turnover for digital transactions) under Section 44AD, and your total income exceeds the basic exemption limit, audit becomes mandatory under Section 44AB read with Section 44AD(4)/(5) — even if turnover is well below ₹1 crore. This is how many moderate-turnover traders unexpectedly fall into audit: not because turnover is high, but because a loss or thin profit is declared without opting for presumptive taxation properly. 3.3 The five-year presumptive lock-in trap Once you opt into Section 44AD in any year, the scheme is meant to be followed for five consecutive assessment years. If you opt out within that window and your total income exceeds the basic exemption limit in the opt-out year, audit is triggered again under Section 44AB(e), regardless of turnover. It is worth planning the in/out decision with a medium-term view rather than year to year. Situation Audit Required? Turnover up to ₹1 crore, no presumptive lock-in issue No Turnover between ₹1 crore and ₹10 crore, ≥95% digital No (subject to 3.2 and 3.3 above) Turnover above ₹10 crore Yes Profit below 6%/8% of turnover under Section 44AD, total income above exemption limit Yes Opted out of 44AD within 5-year lock-in, total income above exemption limit Yes Practical takeaway: don’t judge audit applicability on turnover alone — always check the profit percentage and your presumptive-scheme history for the last five years before finalising your position. 4. Calculation of Turnover and Profits F&O turnover is not the total value of contracts bought and sold — that figure would run into hundreds of crores even for a modest trader and bears no relation to actual business activity. Instead, turnover is computed using the method prescribed by the ICAI Guidance Note on Tax Audit (8th edition), which the Income-tax Department also follows. 4.1 The absolute profit method For every trade that is squared off (closed), calculate the profit or loss on that trade. Turnover = the sum of the absolute value of profits and losses across all closed trades — losses are added, not netted off, against profits. Under the current ICAI guidance, option premium received on sale is not added separately once it is already reflected in the net profit/loss of the closed position, which keeps turnover realistic and prevents artificial inflation. 4.2 Worked example Trade Result Trade 1 (Nifty futures) Profit ₹1,50,000 Trade 2 (Bank Nifty options) Profit ₹2,00,000 Trade 3 (Stock futures) Loss ₹1,50,000 Trade 4
Presumptive Taxation Made Simple: A Complete Guide to Sections 44AD & 44ADA
Presumptive Taxation Made Simple: A Complete Guide to Sections 44AD & 44ADA For AY 2026-27 (FY 2025-26) — less paperwork, more clarity for small businesses and professionals If you run a small business or work in one of the specified professions, you don’t always need to maintain detailed books of account or go through a tax audit. The presumptive taxation scheme under Sections 44AD and 44ADA of the Income-tax Act exists precisely to keep compliance simple for taxpayers who qualify. Here’s a clear, practical walkthrough of how it works, who can use it, and what to watch out for. What Is Presumptive Taxation? Instead of computing actual profit by maintaining full books of account and getting them audited, eligible taxpayers can simply declare a fixed percentage of their turnover or receipts as taxable income. Tax is paid on this presumed income, and the rest of the receipts don’t need to be individually justified with bills or vouchers. It’s a genuinely lighter compliance path — provided you fit within the eligibility conditions. Three sections govern this scheme: Section 44AD for small businesses, Section 44ADA for specified professionals, and Section 44AE for those operating goods carriages. This guide focuses on the two most commonly used — 44AD and 44ADA. Applicability at a Glance Feature Section 44AD (Business) Section 44ADA (Profession) Section 44AE (Goods Carriages) Who it’s for Eligible resident individuals, HUFs and partnership firms (not LLPs) running an eligible business Specified professionals — CAs, doctors, lawyers, engineers, architects, interior designers, technical consultants, and similar notified professions Anyone owning up to 10 goods carriages at any time during the year Basic threshold Turnover up to ₹2 crore Gross receipts up to ₹50 lakh Based on number and type of vehicles, not turnover Enhanced threshold Up to ₹3 crore, if cash receipts and cash payments each stay within 5% of the respective totals Up to ₹75 lakh, if cash receipts stay within 5% of total receipts Not applicable Presumptive income 8% of turnover (6% on the portion received through banking/digital channels) 50% of gross receipts A fixed per-vehicle amount for the months owned in the year Books of account Not required if presumptive scheme is followed Not required if presumptive scheme is followed Not required if presumptive scheme is followed Tax audit Not required, unless declared profit falls below the prescribed rate and total income exceeds the basic exemption limit Not required, unless declared profit falls below 50% and total income exceeds the basic exemption limit Generally not applicable to this scheme Section 44AD: Presumptive Taxation for Businesses Who can opt Resident individuals, resident HUFs, and resident partnership firms (excluding LLPs) carrying on an eligible business — other than a business already covered under Sections 44AE, agency business, or a business earning commission or brokerage. Turnover limits ₹2 crore — the basic threshold for any eligible business. ₹3 crore — available where cash receipts and cash payments during the year each remain within 5% of the total receipts and total payments respectively. Minimum profit to be declared 8% of turnover, where receipts are in cash. 6% of turnover, for the portion of turnover received through banking channels or digital modes (account payee cheque/draft, RTGS, NEFT, UPI, IMPS, credit/debit card, or other prescribed electronic modes). A taxpayer is always free to declare a higher profit than these minimums — the 6%/8% figures are floors, not fixed rates. Section 44ADA: Presumptive Taxation for Professionals Who can opt Resident individuals and resident partnership firms (excluding LLPs) carrying on a profession specified under Section 44AA(1) — this covers professions such as legal, medical, engineering, architectural, accountancy, technical consultancy, interior decoration, and certain other notified professions including film artists, authors, and IT/technology consultants. Gross receipts limits ₹50 lakh — the basic threshold. ₹75 lakh — available where cash receipts do not exceed 5% of total gross receipts for the year. Minimum profit to be declared 50% of gross receipts, regardless of the actual expenses incurred. If genuine profit margins run lower than 50%, it’s worth evaluating the regular books-of-account route instead, since 44ADA doesn’t allow separate expense deductions. Who Cannot Opt for These Schemes Non-resident individuals, HUFs, and firms. LLPs (Limited Liability Partnerships) — only regular partnership firms qualify. Businesses already governed by Section 44AE (goods carriages). Persons carrying on agency business, or earning income by way of commission or brokerage — for Section 44AD. Professionals not falling within the list specified under Section 44AA(1) — for Section 44ADA. Anyone claiming deductions under Sections 10A/10AA/10B/10BA or the Chapter VI-A deductions linked to specific business undertakings, to the extent those provisions require regular books. Conditions and Consequences of Opting The five-year lock-in under 44AD Once a taxpayer opts for Section 44AD in a given year, they’re expected to continue under the scheme for five consecutive assessment years. If, in any of those years, profit is declared below the prescribed 6%/8% rate — effectively opting out — the taxpayer is barred from re-entering Section 44AD for the following five assessment years. During those five disqualified years, if total income exceeds the basic exemption limit, a full tax audit under Section 44AB becomes mandatory, along with regular books of account. This is the single most important planning point to flag with clients before they opt in. When audit still applies For both 44AD and 44ADA, if the declared profit falls below the prescribed rate (6%/8% or 50%, as applicable) and total income exceeds the basic exemption limit, the presumptive route no longer shields the taxpayer from audit — Section 44AB applies, and Form 3CB-3CD must be filed. Advance tax Presumptive taxpayers under 44AD and 44ADA are required to pay their entire advance tax liability in a single instalment on or before 15th March of the financial year, rather than the usual quarterly schedule that applies to regular taxpayers. ITR Form and Disclosure Requirements Which form to file Taxpayers opting for Section 44AD or 44ADA generally file ITR-4 (Sugam), provided they don’t have income sources that require a different form (such
Filing Your Business ITR? Here’s Your Survival Guide
Filing Your Business ITR? Here’s Your Survival Guide Running a business is hard enough — figuring out your Income Tax Return shouldn’t add to the stress. If you’re a small business owner, freelancer, trader, or professional filing your ITR this year, this guide breaks down everything in plain English. No confusing tax jargon, just what you actually need to know. Step 1: Which ITR Form Is Actually Yours? This is where most people get stuck first, so let’s clear it up right away. ITR-3 — This is for you if you run a business or profession and maintain regular books of accounts (i.e., you track your income and expenses in detail). Shopkeepers, manufacturers, professionals with detailed accounting, and F&O/intraday traders usually fall here. ITR-4 (Sugam) — This is the simpler cousin of ITR-3, made for small businesses and professionals who opt for presumptive taxation (explained below). If your turnover is within limits and you don’t want the hassle of maintaining detailed books, this is your form. Quick way to decide: If you’re comfortable declaring a flat percentage of your turnover as profit and skipping detailed bookkeeping — ITR-4. If you maintain proper accounts or your income doesn’t fit the presumptive scheme — ITR-3. Step 2: What’s This “Presumptive Taxation” Everyone Talks About? Think of presumptive taxation as the government saying: “We’ll assume you made a certain profit, so you don’t need to maintain detailed books or get an audit done.” It comes in three flavours: Section 44AD — For small businesses (trading, manufacturing, etc.) with turnover up to ₹2 crore (up to ₹3 crore if most receipts are digital/banking). You declare 8% of turnover as profit (6% for digital receipts) — even if your actual margin is different. Section 44ADA — For professionals (doctors, lawyers, consultants, architects, freelancers, etc.) with gross receipts up to ₹50 lakh (up to ₹75 lakh if mostly digital). You declare 50% of receipts as profit. Section 44AE — For those in the transport business (owning goods carriages), taxed on a per-vehicle basis rather than turnover. Why business owners love it: No need to maintain detailed books, no audit requirement (in most cases), and a much simpler filing process. One thing to keep in mind: Once you opt out of presumptive taxation in a particular year (after choosing it earlier), there are restrictions on going back to it for a few years. So it’s worth deciding this with some thought, not just for convenience this one year. Step 3: Documents You’ll Need — The Checklist Keep these handy before you (or your CA) sit down to file: Basic identity & account documents PAN and Aadhaar Bank account details (all active accounts, with IFSC codes) Bank statements for the financial year Income-related documents Sales/turnover figures (from your accounting software, cash book, or bank credits if you’re informal about bookkeeping) Purchase and expense records GST returns (GSTR-1, GSTR-3B, GSTR-9), if you’re GST-registered — these numbers should tally with what you report in your ITR Form 26AS and AIS (Annual Information Statement) — download these from the income tax portal to cross-check TDS and other reported transactions TDS certificates (Form 16A) if any tax was deducted on your receipts If you maintain books of accounts (ITR-3 filers) Profit & Loss account and Balance Sheet Fixed asset details (for depreciation) Loan statements, if any Details of any capital gains, rental income, or other income sources If you’re on presumptive taxation (ITR-4 filers) Just your total turnover/receipts for the year — the detailed books aren’t mandatory, but keeping a simple summary is always a good habit Investment & deduction proofs (If old tax regime) Section 80C investments (PPF, ELSS, life insurance, etc.) Health insurance premium receipts (80D) Home loan interest certificate, if applicable Any other deductions you plan to claim Step 4: A Few Friendly Reminders Advance tax: If your total tax liability for the year exceeds ₹10,000, you’re expected to pay advance tax in instalments through the year — not just at filing time. This helps you avoid interest later. Match your numbers: Your GST turnover, bank credits, and ITR turnover should broadly tell the same story. Mismatches are one of the most common reasons for tax notices — easily avoidable with a little care. Foreign assets or income: If you hold any foreign bank accounts, investments, or income, this needs separate disclosure — don’t skip it even if the amount seems small. Old Regime, New Regime, and Form 10-IEA — Sorted Out If there’s one thing that confuses business owners every filing season, it’s this: do I file under the old regime or the new regime, and do I need to submit anything extra to make that choice? The new regime is now the default. Unless you actively choose otherwise, your return will be processed under the new tax regime — which has lower slab rates but strips away most deductions and exemptions (80C, 80D, HRA, and several others). If you’re salaried (filing ITR-1 or ITR-2): You simply tick your preferred regime inside the return itself, every year, no separate form needed. If you have business or professional income (filing ITR-3 or ITR-4): This is where Form 10-IEA comes in. If you want to stick with the old regime, you must file Form 10-IEA online, separately from your ITR, before your return’s due date. Your ITR will then ask you to quote the acknowledgement number from this form. The restriction to know about: Once you opt out of the new regime using Form 10-IEA, you can switch back to the new regime only once in your lifetime while you continue to have business or professional income. After that one switch back, the old regime is off the table for good, for as long as you have business/professional income. So this isn’t a decision to make casually every year — it’s worth running the numbers with your CA before committing. Miss the deadline, lose the choice: Form 10-IEA has to be filed on or before your original due date
Read the TDS Section of Your AIS Carefully — It May Have Entries the SFT Doesn’t!
Read the TDS Section of Your AIS Carefully — It May Have Entries the SFT Doesn’t When you open the Annual Information Statement (AIS), it’s natural to go straight to the SFT section first. That’s where the big, high-value transactions sit — property purchases, mutual fund investments, large deposits. It’s the part that usually catches attention. But the TDS/TCS section deserves an equally careful look, because it can contain transactions that simply aren’t there in the SFT. To understand why, it helps to know where each of these sections actually gets its information from. How SFT details come in SFT stands for Statement of Financial Transaction. It isn’t something you file — it’s filed about you, by banks, mutual fund houses, property registrars, companies, and a few other institutions. The law requires them to report certain high-value transactions to the Income Tax Department once a year. “High-value” is the key word here. Each type of transaction has its own threshold — for instance, a large cash deposit, a mutual fund purchase above a certain amount, or a property transaction above a certain value. Only transactions that cross these specified limits, in specified categories, get reported through SFT. Anything below the threshold, or outside these categories altogether, never enters the SFT stream — even if it’s genuine income or a genuine transaction. How TDS details come in TDS stands for Tax Deducted at Source. This is the tax that gets deducted before you receive certain payments — your employer deducting tax from your salary, a bank deducting tax on interest, a client deducting tax before paying a professional fee, and so on. Whoever deducts this tax (called the “deductor”) is required to deposit it with the government and report it to the tax department every quarter, through a TDS return. There’s no minimum threshold for this — the moment tax is deducted on a payment, however small, it gets reported. This data then flows into your AIS (and into Form 26AS) once the deductor’s return is processed. So you can end up seeing things in the TDS section like: Small professional or contract payments where TDS was deducted under sections like 194J or 194C, but the amount was too small to trigger SFT reporting Interest on smaller deposits where the bank deducted TDS, but the sum didn’t cross the SFT threshold Rent or commission payments where the TDS return is the only record of the transaction Payments from deductors who file TDS returns regularly but aren’t SFT filers at all Basically, TDS returns and SFT filings are two separate reporting streams, coming from different types of institutions, feeding AIS independently. They’re not meant to mirror each other, so gaps between the two are expected rather than a sign something’s wrong. To make this more concrete, here’s the kind of information that typically shows up in the TDS section with no matching entry in the SFT section at all: Type of payment Usual TDS section Why it may be missing from SFT Professional or technical fees 194J Amount often falls below the SFT reporting threshold Contractor payments 194C Same — too small to qualify as an SFT transaction Rent paid to a landlord 194I / 194IB No SFT category covers routine rent payments Commission or brokerage 194H No SFT category covers this type of payment Interest on smaller deposits 194A Below the interest amount SFT tracks Payments from smaller or occasional deductors Various The deductor may not be an SFT filer at all In one instance, an assessee had interest on fixed deposits reflected in the TDS section of the AIS, deducted and reported by the bank under section 194A — but the same interest didn’t show up anywhere in the SFT section. Assuming that meant it didn’t need to be reported separately, he went ahead and filed his return without including it, and ended up filing the wrong ITR for his actual income profile that year. The mismatch surfaced later, and he had to go back and file a revised return to correct it. The interest was in the AIS all along — just in the TDS section, not the SFT section, which is exactly the kind of gap this article is about. What to do with this while filing The useful habit here is to treat the TDS section as a source of income information, not just a tax-credit reference. A few steps that help: Go through the TDS/TCS entries individually — not just the total credit figure that feeds Form 26AS. Match each entry to the income head it relates to — interest, professional fees, rent, commission, etc. If an entry doesn’t have a corresponding line in the SFT section or in your own books, check it — it may be income that still needs to go into the return. Check the deductor’s TAN and section code — it tells you what kind of payment triggered the deduction, which makes it easier to place correctly. Doing this protects the TDS credit itself, since credit claims are harder to defend if the matching income wasn’t reported, and it also catches income that might otherwise slip through simply because no other document mentioned it. The point of doing this AIS is meant to give a wider view of the year’s financial activity than Form 26AS did on its own, and the TDS section is part of why. It picks up transactions that fall outside the SFT’s scope, so going through it line by line is worth the time before filing. Blog by : Mittal & Co.
Your Foreign Income is Now Visible in Your AIS
Your Foreign Income is Now Visible in Your AIS A complete guide to what’s disclosed, what’s taxable, and how to file with confidence for AY 2026-27 If you hold a foreign bank account, invest in overseas stocks, or receive income from abroad, there’s an important development from the Income Tax Department worth understanding well ahead of your filing deadline. It isn’t cause for worry — it’s an opportunity to get your disclosures right the first time, with the department essentially showing you what it already knows. 1. What Has Changed On 8th July 2026, the Central Board of Direct Taxes (CBDT) issued an order directing that foreign financial information received by India from over 100 partner countries be displayed directly in every taxpayer’s Annual Information Statement (AIS) — the same statement where your TDS, dividends, and mutual fund transactions already appear. This data flows in through the Automatic Exchange of Information (AEOI) framework — which includes the Common Reporting Standard (CRS) with most countries and FATCA with the United States. Until now, this information stayed within the department’s internal systems. From now on, it appears on your own screen, covering: Foreign bank account balances, closing balances, and interest earned Overseas shareholdings, mutual fund units, and dividends Other specified financial investments and accounts held abroad Data for calendar years 2022, 2023 and 2024 is already being uploaded, and information for calendar year 2025 — the one most relevant to your AY 2026-27 return — will follow as it is received later this year. Officials have been clear that this is meant to help taxpayers disclose correctly, not to serve as a trigger for scrutiny. 2. Does Having Foreign Income Automatically Mean You Owe Indian Tax? Not necessarily — this is the single most important thing to get right, and it depends entirely on your residential status for the relevant financial year: Resident and Ordinarily Resident (ROR) Your global income is taxable in India — foreign salary, rent, dividends, interest, and capital gains all get added to your total income and taxed at your applicable slab rate (or the relevant capital gains rate). You must also complete Schedule FA (foreign assets), Schedule FSI (foreign source income) and Schedule TR (tax relief). Resident but Not Ordinarily Resident (RNOR) You’re taxed only on income received in India, or income accruing from a business controlled from, or a profession set up in, India. Most foreign income earned and retained abroad falls outside the Indian tax net during this phase, and Schedule FA is generally not required. This status commonly applies to returning NRIs for their first two to three years back in India. Non-Resident (NR) Only income that is actually earned or received in India is taxable here. Foreign salary, foreign bank interest, and overseas investment income stay outside India’s tax net, and Schedule FA does not apply. The practical takeaway: an entry appearing in your AIS does not, by itself, create a tax liability. It only becomes taxable income once your residential status brings it within scope. But even when it isn’t taxable, disclosure may still be mandatory for RORs — more on that below. 3. Disclosure vs Taxability — Two Separate Questions This is where many taxpayers get confused, so it’s worth separating clearly: Schedule Purpose Applies to Schedule FA Reports foreign assets held during the calendar year — even if they earned zero income ROR only Schedule FSI Reports actual foreign-source income that is taxable in India, country-wise ROR (and RNOR for India-linked business income) Schedule TR Summarises foreign tax relief claimed, drawing from Schedule FSI Taxpayers claiming FTC A quiet, non-interest-bearing foreign bank account still needs to be reported in Schedule FA if you’re an ROR — disclosure is mandatory regardless of taxability. Skipping it because “there was no income” is one of the most common and costly mistakes we see. 4. Claiming Relief So You Aren’t Taxed Twice If tax has already been withheld or paid abroad on income that is also taxable in India, you’re not meant to pay tax on it twice: Section 90 relief — available where India has a Double Taxation Avoidance Agreement (DTAA) with the source country, such as the India-USA DTAA. Credit is generally the lower of the foreign tax actually paid and the Indian tax payable on that income. Section 91 relief — a unilateral relief available even where no DTAA exists with the other country. Form 67 (Rule 128) is mandatory to claim Foreign Tax Credit (FTC), filed online with proof of foreign tax paid — and it must be filed before you submit your ITR, not after. Filing it late can result in the credit being denied outright, with no remedy available. A Tax Residency Certificate (TRC) from the foreign country is generally required to claim treaty benefits; residents typically use Form 10FB (applied for via Form 10FA). 5. A Quick Illustration Priya, an ROR, holds vested RSUs of her US parent company worth ₹18 lakh. During the year, she received USD dividends equivalent to ₹40,000, on which 25% (₹10,000) was withheld as US tax. Here’s how it flows through her return: Schedule FA — she reports the RSU holding, including peak and year-end balance. Schedule FSI — she reports the ₹40,000 dividend as foreign-source income under “Income from Other Sources”. Form 67 before filing her ITR, attaching proof of the US withholding. Schedule TR — she claims credit for the lower of the ₹10,000 US tax paid and the Indian tax payable on that ₹40,000, under the India-USA DTAA. The result: her dividend is taxed once, correctly, with credit given for tax already paid abroad — exactly the outcome the law intends. 6. What Happens If Something Was Missed in Earlier Years If your AIS now shows a foreign account or income stream from 2022, 2023 or 2024 that wasn’t reported at the time, there’s no need to panic — but it should be addressed promptly: Non-disclosure of foreign assets by an ROR can attract a penalty of
Claiming Foreign Tax Credit- A Practical Guide to Form 67
Claiming Foreign Tax Credit: A Practical Guide to Form 67 Mittal & Company · Chartered Accountants If you’re a resident Indian taxpayer earning income abroad — consulting fees, dividends, royalties, salary, or capital gains — you may already be paying tax on that income twice: once in the source country, and again in India when you file your return. The good news is that this double taxation is entirely avoidable. Form 67 is the mechanism that lets you claim credit in India for the tax you’ve already paid overseas, and once you understand the process, it’s a straightforward compliance step rather than a complicated one. Here’s everything you need to know to claim your Foreign Tax Credit (FTC) correctly and on time. What Form 67 Does When you earn foreign income, the source country typically withholds or collects tax on it. India, however, taxes its residents on their global income — so without relief, the same income gets taxed twice. Form 67 is the online statement you file with the Income Tax Department to claim credit for that foreign tax, under Section 90 (where India has a Double Taxation Avoidance Agreement, or DTAA, with the country) or Section 91 (where no treaty exists). Rule 128 of the Income-tax Rules, 1962 governs the credit itself — how much you can claim and under what conditions. Form 67 is simply how you report it. Who Should File It Form 67 applies to resident taxpayers — individuals, companies, or any assessee who is a resident of India for the relevant year and has paid or had tax deducted on income earned outside the country. If you’re a non-resident, this form isn’t for you; FTC relief under Form 67 is specifically for residents being taxed on global income. You’ll also need to file Form 67 in the reverse scenario: if a loss carried back in a foreign jurisdiction results in a refund of tax you’d previously claimed credit for, that adjustment gets reported here too. How the Credit Is Calculated The FTC you’re entitled to is the lower of: The Indian tax payable on that same foreign income, or The actual foreign tax paid or deducted, converted to rupees using the SBI Telegraphic Transfer Buying Rate (TTBR). A couple of practical points worth keeping in mind:A couple of practical points worth keeping in mind: Any foreign tax paid in excess of what the applicable DTAA allows is simply ignored for credit purposes. Credit generally cannot be claimed against interest, fees, or penalties under the Income-tax Act — only against the tax itself. Foreign tax that is currently under dispute abroad usually cannot be claimed as credit until the dispute is resolved. Documents to Keep Ready Before you sit down to file, gather: PAN and Aadhaar (linked, since this is a prerequisite for e-filing) Details of the foreign income earned and the country it arose in Proof of tax paid or deducted abroad — a foreign tax certificate, TDS certificate, or payment challan Computation showing how the credit has been worked out Return of income filed (or to be filed) in the foreign country, if available Filing Process, Step by Step Log in to the Income Tax e-filing portal with your registered credentials. Navigate to the statutory forms section and select Form 67 for the relevant assessment year. Complete Part A — your basic details (name, PAN, address, assessment year) along with particulars of the foreign income and tax paid. Complete Part B, if applicable — details relating to any refund of foreign tax linked to a credit claimed in an earlier year. Upload your supporting documents — the foreign tax certificate or proof of deduction. E-verify the form using your preferred method (Aadhaar OTP, net banking, DSC, etc.). Make sure the figures in Form 67 match Schedule FSI and Schedule TR in your income tax return — mismatches here are one of the most common reasons credits get questioned during processing. The Deadline Is the Part That Trips People Up This is worth repeating because it’s where most taxpayers lose the credit — not through a calculation error, but through timing. Form 67 must be filed on or before the end of the relevant assessment year, and before you file your original return under Section 139(1) or a belated return under Section 139(4). For AY 2026-27, that means Form 67 needs to be filed by 31st December 2026. Filing your ITR and simply reporting the foreign income in Schedule FSI is not enough on its own — the return and Form 67 work together, and skipping Form 67 (or filing it late) is the single most avoidable reason credits get denied. If you’ve missed the deadline before, note that several appellate tribunals have taken a taxpayer-friendly view and treated the filing requirement as directory rather than mandatory — but it’s far simpler to just file on time than to rely on that relief. A Change on the Horizon: Form 44 Worth flagging early so it doesn’t catch you off guard: under the Income-tax Act, 2025 (effective 1 April 2026), Form 67 is being renumbered as Form 44. Rule 128 continues to govern eligibility and quantum — only the form number and portal label change. For income earned up to FY 2025-26 (AY 2026-27), you’ll continue to use Form 67 as usual. Form 44 is expected to apply to income earned from FY 2026-27 onwards. One proposed change worth watching: a chartered accountant’s certificate may become mandatory for all companies claiming FTC, and for individuals where foreign tax paid is ₹1 lakh or more. This is still at the draft-notification stage as of now, so treat it as a likely direction rather than a confirmed rule, and check in with your CA closer to the transition. The Takeaway Claiming Foreign Tax Credit isn’t complicated once you know the sequence: calculate the credit correctly, gather your proof of foreign tax paid, file Form 67 well before the deadline, and make sure your ITR schedules
Taxation of Bonds & Debentures in India
Taxation of Bonds & Debentures in India A practical guide to interest income, capital gains, TDS and special categories — updated for FY 2025-26 and the Income-tax Act, 2025 Bonds and debentures have quietly become one of the most popular ways for Indian investors to earn steady, predictable income — and for good reason. They’re less volatile than equity, often more rewarding than a fixed deposit, and today’s market gives you everything from government securities to corporate NCDs to sovereign gold bonds. But the return you actually keep depends on how well you understand the tax rules that sit underneath these instruments. This guide walks through exactly that — in plain language, with the current rates and thresholds you need for FY 2025-26 (AY 2026-27), and a look ahead at how things read under the new Income-tax Act, 2025. 1. First, the Building Blocks: Types of Bonds and Debentures Before getting into tax treatment, it helps to know what you’re holding. Indian debt instruments fall into a few overlapping categories, and the classification you fall into often decides which tax rule applies. By security Secured debentures: Backed by a charge on the issuer’s assets, so investors have a claim to recover money if the issuer defaults. Unsecured debentures: Backed only by the issuer’s creditworthiness, with no specific asset as collateral — typically offering a slightly higher coupon to compensate for the added risk. By convertibility Convertible debentures: Can be converted into equity shares of the issuing company after a specified period. Non-convertible debentures (NCDs): Popularly called NCDs, these repay only in cash and never convert into shares — the most common structure for corporate bond issuances. By listing status — the most tax-relevant distinction Listed bonds: Traded on a recognised stock exchange (BSE/NSE). This status matters enormously for tax purposes, as you’ll see shortly. Unlisted bonds: Privately placed or otherwise not traded on an exchange. Tax treatment here has become notably less friendly in recent years. Common instruments you’ll come across Corporate bonds / NCDs – issued by companies and financial institutions, may be listed or unlisted. Government securities (G-Secs) – issued by the Government of India and state governments, considered near risk-free. Tax-free bonds – issued historically by entities like NHAI, REC, PFC and IRFC, offering tax-exempt interest. Capital gain bonds – (rebranded as Section 85 bonds under the Income-tax Act, 2025) issued by REC, PFC, IRFC and NHAI specifically to help investors save capital gains tax. Sovereign Gold Bonds – (SGBs) issued by the RBI on behalf of the Government, denominated in grams of gold. RBI Floating Rate Savings Bonds, 2020 – a popular small-savings option carrying a floating coupon reset every six months. Perpetual bonds / AT1 bonds – issued mainly by banks and NBFCs to shore up capital; these carry no fixed maturity and higher risk. Zero-coupon bonds – issue at a discount and redeem at face value with no periodic coupon; the entire return is booked at maturity (or sale). Market-linked debentures (MLDs) – a category that has seen its tax treatment tightened considerably — more on this below. 2. Taxation of Interest Income This part is refreshingly simple: coupon or interest income from a bond or debenture is taxed as “Income from Other Sources” and added to your total income, taxed at your applicable slab rate. There’s no special concessional rate for interest, regardless of whether the bond is listed, unlisted, government-issued or corporate — with one notable exception discussed below. TDS on interest — Section 193 Under Section 193, tax is generally deductible at 10% on interest on securities, subject to specified thresholds and exemptions: Small-investor exemption: interest on debentures issued by companies and credited/paid through account payee cheque, where the aggregate does not exceed the prescribed threshold in a financial year, is exempt from TDS — though it remains fully taxable in your hands. Government securities: TDS is generally not deducted on interest from Central or State Government securities paid to resident holders, though the income is still taxable at slab rate. No-PAN penalty: if a valid PAN is not furnished, the deduction rate can rise to 20%. New declaration mechanism: from April 2026, a unified self-declaration form (Form 121) replaces the erstwhile Form 15G/15H, allowing eligible resident taxpayers whose total income is below the taxable threshold to avoid TDS at source. Tax-free bonds — the interest exemption Interest on notified tax-free bonds (issued historically by NHAI, REC, PFC, IRFC and similar entities) is fully exempt under Section 10(15). This is a genuine exemption — not merely a deferral — and no TDS is deducted, so you receive the full coupon. That said, this exemption applies only to interest. If you sell a tax-free bond in the secondary market before maturity and book a profit, that profit is a capital gain and is very much taxable under the rules discussed in the next section. Sovereign Gold Bonds Interest on SGBs (currently 2.5% per annum, paid semi-annually) is taxable at your slab rate, with no TDS deducted by the issuer. Capital gains, however, get special treatment — covered separately below. 3. Taxation of Capital Gains — Where Listing Status Really Matters If you sell a bond in the secondary market, or it matures at a value higher than your cost (as with a zero-coupon bond bought at a discount), the profit is a capital gain. This is where the listed-versus-unlisted distinction becomes the single most important factor in your tax outcome, especially after the changes introduced by the Finance (No. 2) Act, 2024. Listed bonds and debentures Held for 12 months or less (short-term): gain is added to your total income and taxed at slab rate. Held for more than 12 months (long-term): taxed at a flat 12.5%, with no indexation benefit available. Unlisted bonds and debentures — always short-term now This is the change that catches many investors off guard. Under Section 50AA, capital gains from unlisted bonds, unlisted debentures, and market-linked debentures (MLDs) transferred, redeemed or maturing on or after
TDS Q1 FY26-27 Due date- 31-07-2026: New Forms, Old Deadline!
Everything deductors need to know before the 31st July 2026 Q1 TDS return deadline If you’ve been filing TDS returns for years on autopilot — same forms, same section codes, same process — this quarter is different. The Q1 return for FY 2026-27 (covering April–June 2026 deductions) is due on 31st July 2026, and it lands right in the middle of the biggest structural overhaul TDS compliance has seen in decades: the transition from the Income Tax Act, 1961 to the Income Tax Act, 2025. Here’s what every deductor — businesses, employers, and individuals with TAN — needs to know before that date. The Big Picture: Two Acts, One Transition Quarter The Income Tax Act, 2025 governs any sum paid or credited on or after 1st April 2026. Anything paid or credited on or before 31st March 2026 continues to be governed by the old 1961 Act — even if the actual tax deposit happens later. This means Q1 FY 2026-27 is genuinely a transition quarter: a company might still need to file arrear corrections for Q4 FY 2025-26 under the old forms and section numbers, while simultaneously filing its fresh Q1 FY 2026-27 return under entirely new form numbers and citations. Mixing the two up is turning out to be the single most common filing error this season. 1. The Forms Have Been Renamed and Renumbered The familiar form names are being phased out for periods starting April 2026: Form 138 replaces Form 24Q (TDS on salary) Form 140 replaces Form 26Q (TDS on domestic non-salary payments) Form 141 replaces Form 26QB, 26QC, 26QD and 26QE (challan-cum-statement for property/asset transactions) Form 143 replaces Form 27EQ (TCS returns) Form 144 covers other TCS-related filings alongside the return calendar 2. Section Codes Are Changing Too For any transaction dated on or after 1st April 2026, deductors must quote the corresponding table item under Section 393 (TDS) or Section 394 (TCS) of the Income Tax Act, 2025 — not the old familiar codes like 194C, 194J, or 194H. Quoting old section numbers for post-April 2026 transactions will trigger system-level validation errors on TRACES, forcing a correction statement even though the late-fee clock keeps running in the meantime. Practical example: if a company pays a contractor on 5th April 2026, the Q1 return must cite Section 393(1) of the new Act, not the old 194C. 3. The TCS Return Deadline Has Moved — and Now Matches TDS This is a change that’s catching quite a few TCS collectors off guard. Under the old regime, Form 27EQ (the TCS return) was due on the 15th of the month following quarter-end. Under the new Form 143, the TCS return now follows the same quarterly schedule as TDS returns — meaning Q1 TCS is also due 31st July 2026, not 15th July. Anyone still working off the old 15th-of-the-month reminder is looking at an unplanned non-compliance window. Note: Form 27EQ still applies for any TCS collections relating to periods up to 31st March 2026, including correction statements for those older periods. 4. Correction Window for TDS/TCS Returns Now Capped at 2 Years The CBDT has tightened the correction rules. From 1st April 2026, any correction to a TDS/TCS return — wrong PAN, mismatched amounts, incorrect challan details, etc. — must be filed within two years from the end of the relevant Tax Year. After that, TRACES will simply reject the correction request. There was a one-time relaxation allowing corrections for older years (from FY 2018-19 Q4 through FY 2023-24 Q1–Q3) up to 31st March 2026, but that window has now closed. Going forward, timely reconciliation against Form 26AS is essential — you won’t get indefinite chances to fix errors. 5. Form 16 Is Also Being Replaced For salary income relating to FY 2026-27, employers must issue Form 130 to employees — not the familiar Form 16. Form 130 can only be downloaded from TRACES once Form 138 (the new salary TDS return) has been filed. Income earned up to 31st March 2026 still uses the old Form 16/16A; anything from 1st April 2026 onward moves to the Form 130/131 series. 6. “Assessment Year” Is Gone — It’s “Tax Year” Now One conceptual shift worth internalizing: the Income Tax Act, 2025 does away with the “Assessment Year” terminology altogether for periods it governs, replacing it with a single “Tax Year.” So for challans, returns, and correspondence relating to April 2026 onward, you should be selecting “Tax Year 2026-27” — not “AY 2026-27.” Selecting the assessment year label on a post-April 2026 challan risks misallocating the payment to the wrong year’s records. The e-filing portal is expected to support both labels during the transition, but the onus is on the deductor to pick correctly. The Deadline Snapshot for Q1 FY 2026-27 Compliance item Due date TDS/TCS deposit for June 2026 deductions 7th July 2026 Form 138 (Salary TDS return, Q1) 31st July 2026 Form 140 (Non-salary TDS return, Q1) 31st July 2026 Form 143 (TCS return, Q1) 31st July 2026 Any pending Q4 FY 2025-26 corrections (old Act forms) Ongoing, separately What Happens If You Miss It The penalty structure itself hasn’t changed: Late filing fee (Section 427, formerly 234E): ₹200 per day of delay, capped at the total TDS/TCS amount for that statement — and it’s mandatory, with no discretion to waive it. Penalty under Section 271H-equivalent provisions: an additional ₹10,000 to ₹1,00,000 for late or incorrect filing, at the discretion of the assessing authority. Interest for late deposit: 1.5% per month (or part-month) from the date of deduction to the date of actual deposit. Interest for failure to deduct: 1% per month from the date tax was deductible to the date it was actually deducted. Disallowance risk: failure to deduct or deposit TDS can disallow 30% of the underlying business expense from taxable income — a direct hit to your P&L, not just a compliance penalty. In cases of willful default in depositing deducted tax, prosecution can follow, with imprisonment ranging from three
CA vs DIY Tax Filing: Which Option Saves More Money and Time in 2026?
TL;DR DIY tax filing has become easier thanks to online tax portals and automation tools. However, convenience does not always translate into better outcomes. While salaried individuals with straightforward finances may successfully file their own returns, freelancers, professionals, investors, startups, and business owners often benefit significantly from professional tax guidance. The real comparison is not just filing cost—it is about total value, tax savings, compliance protection, and time efficiency. The Rise of DIY Tax Filling Over the last decade, tax filing in India has become increasingly digital. Features such as: Prefilled returns AIS integration Online verification Automated tax calculations Digital document uploads have encouraged many taxpayers to file returns independently. As a result, thousands of individuals now ask: “Why pay a CA when I can file my taxes online?” The answer depends entirely on the complexity of your financial situation. What Does DIY Tax Filing Mean? DIY (Do-It-Yourself) tax filing involves preparing and submitting your Income Tax Return without professional assistance. Typically, taxpayers: Collect financial documents Choose an ITR form Calculate taxable income Claim deductions Submit returns online For simple income structures, this process can be relatively straightforward. However, complexity increases significantly when multiple income streams are involved. Examples include: Capital gains Foreign investments Business income Freelance income Rental income GST obligations What Does a Chartered Accountant Do? A Chartered Accountant offers much more than filing assistance. Professional tax advisory generally includes: Tax planning Return preparation Deduction optimization Compliance review Notice management Audit support Business taxation guidance GST coordination An experienced CA evaluates your overall financial position before filing the return. This often results in greater tax efficiency and lower compliance risk. CA vs DIY Tax Filing Comparison Table Factor DIY Filing Chartered Accountant Filing Cost Lower Higher upfront Tax Savings Limited Often higher Time Required Moderate to High Minimal Error Risk Moderate Low Tax Planning Limited Comprehensive Notice Handling Self-managed Professional support Business Compliance Difficult Managed effectively Audit Support Not available Available Refund Optimization Basic Advanced Cost Comparison The biggest reason people choose DIY tax filing is cost. At first glance: DIY Filing = Cheaper But this comparison can be misleading. Consider the following example. Scenario A: DIY Filing Taxpayer claims only basic deductions. Potential tax savings missed: Additional deductions Investment optimization Capital gain planning Result: Lower filing cost Higher overall tax burden Scenario B: CA-Assisted Filing Professional review identifies: Eligible deductions Tax credits Compliance opportunities Regime selection benefits Result: Slightly higher filing fee Potentially significant tax savings The true cost comparison should include: Tax Paid + Filing Cost + Risk Exposure not merely filing fees. Time Comparison Time is often overlooked when evaluating tax filing options. DIY Tax Filing Process Tasks include: Learning tax rules Understanding deductions Reviewing AIS Verifying Form 26AS Selecting tax regime Choosing correct ITR form Filing and verification For inexperienced taxpayers, this can consume several hours. CA-Assisted Filing You typically provide: Documents Financial information Investment details The CA handles: Calculations Compliance checks Form selection Filing process This significantly reduces taxpayer effort. For business owners, time saved can be worth far more than the filing fee. Tax Savings Comparison This is where professional expertise often delivers the highest value. A CA can help evaluate: Tax Regime Selection Many taxpayers choose the wrong tax regime. A professional comparison can prevent unnecessary tax payments. Deduction Optimization Eligible deductions may include: Section 80C Section 80D NPS contributions Home loan benefits Education loan benefits Many DIY filers fail to maximize available deductions. Capital Gains Planning Investors frequently overlook: Indexation benefits Set-off provisions Loss carry-forward opportunities Professional guidance helps minimize tax liability legally. Error & Compliance Risk Analysis Errors remain one of the biggest hidden costs of DIY filing. Common mistakes include: Incorrect ITR form Missing income disclosures AIS mismatches Capital gain reporting errors GST inconsistencies Deduction miscalculations Consequences may include: Notices Penalties Interest charges Additional documentation requests Professional review dramatically reduces these risks. Best Option for Salaried Employees DIY filing may be suitable if: Single employer No capital gains No rental income No foreign assets Limited deductions However, a CA becomes valuable when: Income exceeds higher tax brackets Investments become complex Multiple income sources exist Tax planning opportunities increase Best Option for Freelancers and Consultants Freelancers face unique tax challenges. Examples include: Multiple clients Business expenses Advance tax GST obligations Professional income reporting Professional assistance often provides substantial value through: Expense optimization Compliance management Better tax planning For most freelancers, CA-assisted filing delivers a strong return on investment. Best Option for Business Owners Business owners rarely benefit from DIY filing. Business taxation involves: Financial statements Expense categorization Depreciation GST reconciliation Advance tax Audit applicability A mistake can cost significantly more than professional fees. For businesses, professional support is generally the smarter long-term choice. Situations Where Hiring a CA Is Essential Consider professional assistance if you have: Business income Freelance income Capital gains Foreign assets Rental properties GST registration Startup operations Tax notices High-value investments These situations typically require expertise beyond basic online filing. How Mittal & Co. Helps Taxpayers Save Time and Money Mittal & Co., Chartered Accountant in Pune, assists individuals, professionals, startups, and businesses with comprehensive tax advisory and compliance solutions. Services include: Income Tax Return Filing Tax Planning GST Compliance Startup Advisory Business Taxation Accounting Services Audit & Assurance The firm’s objective is not merely filing returns but helping clients improve tax efficiency while remaining fully compliant. Final Verdict: Which Option Saves More Money and Time? The answer depends on the complexity of your financial profile. DIY Filing Is Suitable For: Basic salary income Minimal deductions No investments or business activities Hiring a CA Is Better For: Freelancers Professionals Investors Startup founders Business owners High-income individuals For simple returns, DIY filing may save a small filing fee. For more complex financial situations, a Chartered Accountant often saves significantly more through better tax planning, reduced errors, improved compliance, and valuable time savings. Ultimately, the smartest choice is not the cheapest option—it is the option that delivers the highest overall value. Need Expert Tax Filing Support in
Taxation of RSUs in India: A Complete Guide for Employees
Taxation of RSUs in India: A Complete Guide for Employees Understanding how Restricted Stock Units are taxed — at vesting, at sale, and beyond Restricted Stock Units (RSUs) have become a standard part of compensation for employees at MNCs, tech companies, and startups with global parents. While RSUs can be a valuable wealth-creation tool, they come with a tax treatment that trips up many employees — largely because RSUs are taxed twice, under two different heads of income, at two different points in time. This article breaks down exactly how RSU taxation works in India, so you know what to expect and how to plan for it. 1. What Exactly Is an RSU? An RSU is a promise by an employer to transfer a specific number of company shares to an employee, subject to a vesting schedule (typically time-based, sometimes performance-based). Unlike stock options (ESOPs), there is no exercise price — once vested, the shares are simply transferred to the employee’s demat account at no cost (or a nominal cost). For Indian employees, RSUs are commonly granted by: The Indian subsidiary of a foreign parent (e.g., a US-listed company granting RSUs to its India employees) Indian listed companies granting RSUs to their own employees Startups, though ESOPs are more common than RSUs at that stage 2. The Two-Stage Taxation of RSUs RSU taxation in India happens in two distinct events, and it is critical to treat them separately: Event Head of Income What Is Taxed Vesting Salary (Perquisite) u/s 17(2)(vi) Fair Market Value (FMV) of shares on the vesting date Sale Capital Gains Difference between sale price and FMV on vesting date (the cost of acquisition) Key principle: the FMV at vesting becomes your cost of acquisition for capital gains purposes when you eventually sell. This is what prevents the same appreciation from being taxed twice. 3. Taxation at Vesting — The Perquisite The moment RSUs vest, their FMV on the vesting date is treated as a perquisite and added to your salary income for that financial year, taxed at your applicable slab rate. This is true even if you do not sell a single share — the mere vesting triggers tax. How FMV Is Determined Listed shares (Indian stock exchange): the average of the opening and closing price on the vesting date Shares listed on a recognised stock exchange outside India: the price on that exchange, converted to INR using the State Bank of India’s telegraphic transfer buying rate on the specified date Unlisted shares: FMV as determined by a merchant banker as per Rule 3(8) of the Income-tax Rules TDS on Vesting Your employer is obligated to deduct TDS on the perquisite value at the time of vesting, just as it would on any other salary component, and reflect it in Form 16 and Form 26AS. For RSUs from a foreign parent, the Indian employer (as the ‘person responsible for paying’) still has this TDS obligation — many employees see a portion of their vested shares withheld or sold (‘sell-to-cover’) to fund this TDS, or a corresponding cash deduction from their regular salary. Practical tip: Always reconcile the perquisite value reported in your Form 16 with your employer’s RSU statement / broker vesting confirmation before filing your return. Mismatches are a common source of notices. 4. Taxation at Sale — Capital Gains When you eventually sell the vested shares, capital gains arise on the difference between the sale consideration and the FMV on the date of vesting (which is your cost of acquisition). The holding period is computed from the vesting date to the date of sale — not from the grant date. Classification: Short-Term vs Long-Term Type of Share Long-Term Holding Period STCG Rate LTCG Rate Listed Indian equity shares (STT paid) More than 12 months 20% (u/s 111A)* 12.5% above ₹1.25 lakh exemption (u/s 112A)* Foreign listed shares (e.g., US-listed parent) / unlisted shares More than 24 months Slab rate 12.5% without indexation* *Rates as per the capital gains regime effective from 23 July 2024 (Finance Act (No. 2), 2024). Please confirm applicable rates and exemption thresholds for the relevant assessment year at the time of filing, since these have seen recent revisions. For most Indian employees holding RSUs of a US-listed or other foreign parent, the shares fall in the ‘foreign / unlisted’ category above (since no STT is paid on a foreign exchange), so the 24-month test and slab/12.5% rates apply rather than the more favourable listed-equity rates. 5. Foreign Assets Reporting — Schedule FA If you hold RSUs of a foreign company (typically the US parent of your Indian employer), you are required to disclose these holdings in Schedule FA (Foreign Assets) of your Income Tax Return, regardless of value and even if you have already offered the perquisite to tax. This applies to resident and ordinarily resident (ROR) taxpayers. Schedule FA requires details such as country of holding, name of entity, acquisition date, initial investment value, peak value during the calendar year, and closing value Note the reporting period for Schedule FA follows the calendar year (January–December), not the Indian financial year — a frequent point of confusion Non-disclosure can attract penal consequences under the Black Money Act, 2015, quite apart from income-tax scrutiny, so this should never be treated as optional even for small holdings 6. Dividends on RSU Shares If the vested shares pay dividends before you sell them, such dividends are taxable in India under ‘Income from Other Sources’ at slab rates. If the shares are of a US company, a 25% US withholding tax typically applies at source, and relief can usually be claimed in India under the India-USA DTAA (subject to filing Form 67 and meeting documentation requirements for the foreign tax credit). 7. A Worked Example Assume an employee is granted RSUs by the Indian arm of a US-listed company. 100 units vest on 15 June 2024 when the stock trades at $50 (₹83/USD), and the employee sells all 100 shares on 20