Charles Schwab RSU India Tax Filing — Complete ITR-2 Guide (FY 2025-26)

Charles Schwab handles equity awards for employees at hundreds of US-listed companies — SAP, Cisco, Intel, Qualcomm, and many others. If your employer uses Schwab's Stock Plan Services and you're a resident in India, you have filing obligations that go well beyond just reporting the sale proceeds. This guide covers capital gains computation, Schedule FA disclosure, and Form 67 — specific to the Schwab statement format, with actual numbers.

What the Schwab Statement Contains

Charles Schwab provides two key documents for RSU holders filing Indian taxes:

1. Equity Award Center — Gains & Losses Report: Shows each RSU lot, the grant date, vest date, fair market value at vesting (FMV), cost basis, sale price, and net gain or loss. This is the primary document for capital gains.
2. Tax Forms (1099-B, 1099-DIV): US tax documents. The 1099-DIV reports any dividends received. For Indian filing purposes, you use these to populate Schedule OS and Form 67.

To download your Gains & Losses report from Schwab: log in → Accounts → Realized Gain/Loss → set date range → click the download icon → select "Export Details Only" → Export. This gives you a CSV with every lot.

Perquisite Tax at Vesting — What Your Employer Already Deducted

When your RSUs vest, the FMV of the shares on the vest date is treated as salary income under Section 17(2) of the Income Tax Act. Your Indian employer is required to deduct TDS on this amount and reflect it in your Form 16.

This is the perquisite. It is taxed at your slab rate. It has nothing to do with any gain or loss — it is taxed whether the share price goes up or down after vesting.

The cost of acquisition for capital gains purposes is this same FMV — ₹7,77,600 for 50 shares, or ₹15,552 per share.

Capital Gains Calculation — Rule 115 and the SBI TT Rate

Every rupee conversion in your RSU tax filing — cost of acquisition, sale proceeds, dividend income — must use the SBI TT Buy rate under Rule 115 of the Income Tax Rules, 1962.

Which Rate for Which Transaction

Transaction	Which Date's Rate	Example
Vest (cost of acquisition)	Last working day of month before vest month	Vest on 15 March → rate as of 28 February
Sale proceeds	Last working day of month before sale month	Sale on 20 August → rate as of 31 July
Schedule FA A3 initial value	Last working day of month before first vest in calendar year	First vest in February → rate as of 31 January
Schedule FA A3 peak value	Rate on the date of peak price during calendar year	Highest closing price during Jan–Dec
Schedule FA A3 closing value	Last working day of December	Rate as of 31 December

The Capital Gains Formula

STCG vs LTCG — Holding Period from Vest Date

The holding period for RSUs starts on the vest date, not the grant date. This matters because RSU grants typically run 3–4 years before each lot vests.

Holding Period	Classification	Tax Rate (FY 2025-26)
Less than 24 months from vest	Short-Term Capital Gain (STCG)	Slab rate
24 months or more from vest	Long-Term Capital Gain (LTCG)	12.5% without indexation under Section 112A

Sell-to-Cover Shares — Are They Taxable Again?

When your RSUs vest, Schwab typically sells a portion of the shares automatically to cover the withholding tax due on the perquisite. This is called sell-to-cover.

These sell-to-cover shares are a capital gains event in India. Even though the purpose was to cover tax, the sale of shares at a price above the vest-date cost creates a taxable capital gain.

In most cases the holding period is zero or one day, so the gain is short-term. The gain per share is small — the difference between the sell-to-cover price and the FMV at vesting — but it must be reported in Schedule CG of ITR-2.

Schedule FA — Table A2 and A3 for Your Schwab Account

Schedule FA is mandatory for every Resident and Ordinarily Resident (ROR) who held a foreign asset at any point during the calendar year — January to December, not the Indian financial year.

For Schwab RSU holders, two tables apply:

Table A2 — Foreign Custodial Account (Schwab Brokerage Account)

Your Schwab stock plan account is a foreign custodial account. A2 requires:

• Country: United States
• Name of financial institution: Charles Schwab & Co., Inc.
• Account number: Your Schwab account number
• Peak balance during calendar year: Highest value of cash + shares held at any point in Jan–Dec, converted to INR
• Closing balance as of 31 December: Value of cash + shares on 31 December, in INR
• Gross interest credited: Any interest earned in the account during the calendar year, in INR

Table A3 — Foreign Equity Holdings

A3 requires a separate entry for each company whose shares you held in your Schwab account during the calendar year:

• Name of entity: Your employer's company name (e.g., Cisco Systems, Inc.)
• Country: United States
• Date of acquisition: Earliest vest date for that holding
• Initial value: FMV at acquisition × shares × SBI TT rate on the relevant date
• Peak value during calendar year: Highest closing price during Jan–Dec × shares held at that point × SBI TT rate on that date
• Closing value as of 31 December: Closing price on 31 December × shares held × SBI TT rate (last WD of December)

Form 67 — Foreign Tax Credit on Dividends

If your Schwab account received dividends from US-listed shares, those dividends are subject to US withholding tax before they reach your account. Under the India-US Double Taxation Avoidance Agreement (DTAA), the withholding rate for dividends is 25% if you have submitted a W-8BEN form to Schwab.

You can claim credit for this withholding tax against your Indian tax liability under Section 90 of the Income Tax Act. To do so, you must file Form 67 before filing your ITR — not after. Form 67 filed after ITR submission does not qualify for the credit.

Form 67 requires:

• Country of tax payment: United States
• Article of DTAA relied upon: Article 10 (Dividends)
• Amount of income in foreign currency
• Amount of income in INR (at Rule 115 SBI TT rate)
• Tax paid abroad in foreign currency
• Tax paid abroad in INR

How to File ITR-2 with Schwab RSU Income

RSU holders cannot use ITR-1. Foreign assets and foreign income require ITR-2 (or ITR-3 if you have business income). Here is where each piece of income goes:

Income / Disclosure	Schedule in ITR-2	Notes
Perquisite at vesting	Schedule S (Salary)	Already in Form 16; verify it matches
Capital gains on RSU sale	Schedule CG	Separate rows for STCG and LTCG; each lot separately
Sell-to-cover gains	Schedule CG	Short-term in most cases
Dividend income	Schedule OS → Foreign Source Income	Gross dividend before US withholding
Schedule FA disclosure	Schedule FA → A2, A3	Calendar year Jan–Dec, not FY
Foreign tax credit on dividends	Schedule TR + Form 67	File Form 67 first, then ITR

Five Errors That Appear Every Year

1. Using the Transaction Date Rate Instead of Rule 115 Rate

The most common error. The rate on the sale date and the Rule 115 rate (last working day of the prior month) are different. Always use Rule 115.

2. Counting Holding Period from Grant Date

The 24-month holding period for LTCG starts from the vest date, not the grant date. Grants typically precede vesting by 1–4 years. Using the grant date incorrectly classifies short-term gains as long-term.

3. Skipping Schedule FA Because "No Income Arose"

Schedule FA is triggered by ownership, not income. Zero dividends, no sales — the disclosure is still mandatory if you held shares at any point in the calendar year.

4. Not Reporting Sell-to-Cover Gains

Sell-to-cover shares are a separate capital gains event. The gain is usually small — often a few hundred rupees per share — but the omission is a misreporting under Section 270A.

5. Filing Form 67 After ITR

Form 67 must be filed before the ITR. If you file ITR first and then Form 67, the foreign tax credit is disallowed. The CBDT circular is clear on sequencing.

How GainSutra Handles Schwab Statements

GainSutra has a dedicated parser for Charles Schwab Equity Award statements. Upload your Gains & Losses report and the tool:

• Extracts every lot with vest date, FMV, sale date, and sale price
• Applies the correct Rule 115 SBI TT rate to each transaction automatically — from a database of rates going back to 2001
• Classifies each lot as STCG or LTCG based on the vest-to-sale holding period
• Generates Schedule FA A2 and A3 entries with peak value computed from a live stock price database
• Produces Form 67 data for dividend withholding
• Exports an Excel workbook and software-ready files for Computax, Genius, ClearTax, and TaxBuddy

All computation runs in your browser. No PDF, no transaction data, no client financial information is sent to any server.

Summary

• Perquisite at vesting is salary income — your employer handles TDS on this
• Capital gains on sale use Rule 115 SBI TT rate — last working day of prior month
• Holding period starts from vest date, not grant date
• Sell-to-cover is a separate, taxable capital gains event
• Schedule FA A2 (Schwab account) and A3 (equity holdings) are mandatory for any ROR who held shares in calendar year
• Form 67 for dividend withholding must be filed before ITR, not after
• Non-disclosure of Schedule FA: ₹10 lakh flat penalty per asset under Black Money Act

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