Foreign RSUs You Paid Tax On But Never Put in Schedule FA: Which FAST-DS Track You Are Actually On

Income Tax · Foreign Assets · Quick answer 30 sec · Full read 16 min

Do you actually have exposure?

Work out your aggregate foreign-asset value on 31 March 2026 using the statutory method before concluding you are above or below any floor. It is not today’s market price.

The valuation date is 31 March 2026 (rule 2(1)(e), Foreign Assets of Small Taxpayers-Disclosure Scheme Rules, 2026). Rule 3(1)(c)(i) and FAQ Q24 of the CBDT’s own FAQ set the fair market value of quoted shares as the higher of cost of acquisition and the average of the lowest and highest price on an established market on that date. Higher of — not current value.

That traps anyone whose company’s share price has fallen. An RSU holder whose shares are now worth half what they were at vest may still be valued at the vest price. Two colleagues with identical holdings today can sit on opposite sides of a threshold purely because one joined earlier at a lower grant price. Where no market valuation is carried out, the indexed cost of acquisition is deemed to be the fair market value (rule 3 provisos; FAQ Q21).

Why the number matters so much: since 1 October 2024 there is reportedly a Rs 20 lakh floor below which the penalty this scheme protects against does not apply at all. That is set out in the next section, along with why it needs checking rather than trusting.

One note for returning NRIs: section 43 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 applies to a resident other than not ordinarily resident. RNOR sits outside its scope. If you are currently RNOR, raise that with your CA before assuming you have section 43 exposure at all.

Which track are you actually on?

One question sets the track: was the income that funded the asset already offered to tax in India, or earned while non-resident and never declared after you became resident?

Section 133 of the Finance Act, 2026 creates two:

Form 1, Part-B, option 4 names your case in the government’s own words:

“asset located outside India acquired from income which has been offered to tax under the Income-tax Act, 1961 by the assessee, but such assets were not declared by him in the relevant schedule in the return of income”

That is the RSU holder whose employer deducted perquisite tax at vest. The income was offered to tax. The asset — the shares, and any foreign brokerage balance from the proceeds — was never declared in Schedule FA. Form 1, Part-D, row 6 confirms the rate for this track: “enter Nil or ₹ 1 lakh.”

The rule 4 illustrations make the contrast concrete. A foreign bank account of Rs 60 lakh plus undisclosed foreign income of Rs 20 lakh, on track 1, costs Rs 48 lakh — 60% of Rs 80 lakh. A Rs 3 crore plot bought in 2015 while non-resident and never declared afterwards, on track 2, costs Rs 1 lakh. That is the whole argument in two numbers.

One hard boundary: a foreign mutual fund worth Rs 2.5 crore plus NYSE-quoted shares worth Rs 4 crore, totalling Rs 6.5 crore, is ineligible entirely — not merely as to the excess (rule 4 illustration 3; FAQ Q20). The Rs 5 crore ceiling is an eligibility gate, not a cap. Our guide to RSU and ESOP taxation in India covers the underlying Schedule FA obligation in detail.

What you are buying immunity from

Section 43 of the Black Money Act, 2015: Rs 10 lakh for each year you failed to furnish, or furnished inaccurate particulars of, a foreign asset in your return. Per year. Three unreported years is, in principle, Rs 30 lakh.

Two things soften that. Neither removes it.

The Rs 20 lakh floor. The Finance (No. 2) Act, 2024 reportedly replaced the old proviso — which exempted only bank accounts under Rs 5 lakh — with an exemption for all foreign assets other than immovable property whose aggregate does not exceed Rs 20 lakh, with effect from 1 October 2024. This is secondary analysis, not verified primary text. It comes from Lakshmikumaran & Sridharan (updated March 2026), corroborated by Business Standard and TaxGuru. The consolidated text of section 43 freely available online still shows the pre-2024 Rs 5 lakh bank-account proviso, so it cannot be used to confirm this. Two further cautions: the floor took effect in October 2024, so years before that were governed by the narrower proviso; and the statute provides no valuation method for non-bank assets against this threshold, which is a genuine gap. Do not conclude you are below the floor without a CA confirming it on your own numbers. This is the single point in this article where being wrong costs the most.

The penalty is discretionary. Section 43 says the Assessing Officer “may direct”, not must. Lakshmikumaran & Sridharan report that the Mumbai ITAT applied the Supreme Court’s principle in Hindustan Steel Ltd. v. State of Orissa [1972] 83 ITR 26 — that penalty for a statutory breach is quasi-criminal and should not be imposed absent deliberate defiance — and set aside a section 43 penalty on bona-fide-error grounds. The same bench reportedly set aside another on a joint account held for administrative convenience. These citations come from that analysis; we have not read the original decisions. A genuine omission has support as a defence. It is not a guarantee.

Is it worth paying?

That is a calculation, and this article does not make it for you. Both sides are real.

For paying: Rs 1 lakh, a four-month payment window, and a certificate of immunity from Black Money Act proceedings on the declared assets. A clean slate, with no recurring annual exposure. Against: the penalty is discretionary, reportedly floored at Rs 20 lakh, and has been contested successfully. If your aggregate is modest and the omission was genuinely inadvertent, Rs 1 lakh may be buying immunity from something with a reasonable argument against it in your case.

The number of years matters more than most coverage suggests. Because section 43 operates per year, someone who held foreign shares across five or six returns faces a stacked figure, and the Rs 20 lakh floor did not exist for the earlier ones. Against that, a flat Rs 1 lakh regardless of how many years are declared looks very different than it does against a single year.

Who can file, and why the exclusions are narrower than reported

Coverage has repeatedly said the scheme is closed to anyone “under investigation.” The CBDT’s own FAQ contradicts that directly.

FAQ Q49 confirms that pending proceedings under the Income-tax Act, 1961 or the Black Money Act, 2015 are not a bar. The Assessing Officer must take your declaration into account when finalising the pending order. Per FAQ Q50 the actual exclusions are only two: income or assets representing proceeds of crime where proceedings under the Prevention of Money-laundering Act, 2002 have been initiated or are pending; and an assessment year for which an assessment under the Black Money Act, 2015 is already completed. A pending income-tax notice is not a bar. A completed Black Money Act assessment, or a live PMLA case, is.

You can file if you were resident in India in the relevant previous year, or if you are now non-resident or RNOR but were resident in the year the income arose or the asset was acquired (FAQ Q6–Q8). It is also available where you did file but failed to disclose, or where the asset or income escaped assessment within the meaning of section 147 of the Income-tax Act, 1961 (FAQ Q9). Form 1’s verification requires you to certify that section 140 of the Finance Act, 2026 is not attracted; the content of section 140 is described in FAQ Q50, and we have not read the bare section.

The payment clock, and what happens if you miss it

Four months from the end of the month of the department’s Form 2 order. Miss it and the declaration is treated as never filed.

The Gazette’s worked example: an order dated 22 September 2026 gives a clean deadline of 30 November 2026, 1% interest from 17 December, and an outer limit of 31 January 2027. The illustration itself prints the last two payment dates as “23rd January, 2026” and “5th February, 2026”, which its own arithmetic requires to read 2027. A published typo in the notification.

A useful margin for anyone valuing unlisted stock: for assets other than bank accounts, rule 5(2) and FAQ Q36 allow a variance of up to 20% between your declared value and the department’s later figure before that variance alone voids the declaration. Form 4, the immunity certificate, issues within one month from the end of the month of your Form 3 payment intimation.

What the immunity actually covers, and what it does not

It is Black Money Act immunity. It does not reach other Acts, and it does not reopen anything already assessed.

Form 4(c) puts it verbatim: immunity “from levy of any further tax or penalty and prosecution for any offence under the Black money (Undisclosed Foreign income and assets) and Imposition of tax Act, 2015”, subject to sections 130 to 144 of the Finance Act, 2026. FAQ Q48 adds that the declared income or investment will not be included in your total income under either the Income-tax Act, 1961 or the Black Money Act, 2015. FAQ Q47 is the firm limit: once paid, you cannot claim rectification, revision, set-off or relief in any assessment already completed for those years. Check for completed assessments before you decide.

Three Acts run at once in a salaried RSU holder’s case. The scheme sits under the Finance Act, 2026 (sections 130 to 144). The penalty it covers sits under the Black Money Act, 2015 (section 43). The filing obligation that created the Schedule FA gap sits under the Income-tax Act, 1961. The Income-tax Act, 2025 replaced the 1961 Act from FY 2026‑27, but the years being disclosed here predate that change.