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

If your RSUs are held at Fidelity NetBenefits, you have two separate tax events — not one. Most people know about the capital gains on a sale. Fewer realise that the perquisite at vesting is already salary income under Section 17(2) of the Income Tax Act, and the cost of acquisition for any future sale flows directly from that vest-date Fair Market Value (FMV).

Getting either of these wrong compounds into errors across Schedule CG, Schedule FA and Form 67. This guide covers each stage in sequence — the way a CA would walk through your Fidelity statement before preparing your return.

Stage 1 — Perquisite Income at Vesting

When RSUs vest, shares are transferred to you by your employer (directly or via Fidelity). The FMV of those shares on the vest date is treated as a perquisite under Section 17(2)(vi) of the Income Tax Act. Your employer computes this in INR using the SBI TT Buy rate under Rule 115 and deducts TDS as part of salary. This amount will appear in your Form 16 under the head "Value of perquisites".

You do not separately disclose this in Schedule CG. It is already part of gross salary. What it does do is fix your cost of acquisition for capital gains purposes — under Section 55(2)(fb), the cost of acquisition of shares received as perquisite is the FMV on the date of vesting.

Stage 2 — Capital Gains on Sale

When you sell shares from your Fidelity account, the difference between the sale price (in INR at the Rule 115 rate) and the cost of acquisition (vest-date FMV in INR at the Rule 115 rate) is a capital gain or loss. The tax rate depends on how long you held the shares after vesting.

Foreign listed equity — which Fidelity RSU shares are — qualifies as long-term after 24 months from the vest date. The applicable section is Section 112 of the Income Tax Act (not Section 112A, which requires securities listed on Indian stock exchanges with STT paid). The Finance Act 2024 reduced the LTCG rate under Section 112 from 20% (with indexation) to 12.5% (without indexation) effective July 23, 2024.

Note that the Rs. 1.25 lakh annual LTCG exemption under Section 112A does not apply to foreign equity. The full LTCG amount is taxable at 12.5%.

Reading Your Fidelity Statement

Log into Fidelity NetBenefits and download your Plan Activity statement or Grant and Vest history. The data you need for each vest event is: vest date, number of shares vested, FMV per share on vest date, and the gross proceeds and sale date for any subsequent sale.

Fidelity shows figures in USD. The INR conversion must be done by you using the Rule 115 SBI TT Buy rate — Fidelity does not apply Indian tax rates. The "Value" column in Fidelity is the USD value only. Do not use any exchange rate provided by Fidelity or your bank; the only legally applicable rate is the SBI TT Buy rate for the applicable month-end.

Sell-to-Cover — A Separate Transaction

When RSUs vest, Fidelity typically sells a portion of the shares to cover tax withholding — this is called sell-to-cover. For Indian residents, this withholding corresponds to TDS your employer deducts on the perquisite value.

From an income tax standpoint, sell-to-cover shares are a sale by you — with the vest-date FMV as cost of acquisition and the sell-to-cover sale price as proceeds. Because the sale happens on or very close to the vest date, the holding period is typically zero or a few days, making it Short-Term Capital Gain, taxed at your applicable slab rate.

To find your sell-to-cover details in Fidelity: go to Accounts → History → Activity and filter by "Sell". Each sell-to-cover sale will show as a separate transaction with a different number of shares than the full vest quantity.

Lot-by-Lot Computation — No Shortcuts

Each vesting event is an independent lot with its own cost basis, vest date, and holding period. You cannot average across vests. You cannot use a single exchange rate for the year.

A typical Fidelity statement for someone with quarterly vesting and two years of history has 8 vest events — and each lot sold during the year requires a separate calculation. If you vested quarterly from January 2023 to March 2025 and sold all shares in April 2025, some of those lots are LTCG (vested before April 2023) and some are STCG (vested after April 2023). The ITR treats them at different rates.

Schedule FA — Foreign Asset Disclosure

If you hold Fidelity RSU shares at any point between January 1 and December 31 of a calendar year, you must disclose them in Schedule FA of ITR-2. Schedule FA follows the calendar year — not the Indian financial year. For ITR filed for FY 2025-26, Schedule FA covers CY 2025 (January 1 to December 31, 2025).

A2 — Fidelity Custodial Account

Report your Fidelity NetBenefits account under A2 (Foreign Custodial Accounts). You need: the account details, country (USA), peak balance during the calendar year, and closing balance on December 31. The peak balance is the highest aggregate value of the account on any single day — not the closing balance. Convert to INR using the Rule 115 rate for the relevant month-end.

A3 — Foreign Equity Holdings

Report each company's shares separately under A3. For each holding you need: the company name, country, date of acquisition, initial value (FMV on vest date × Rule 115 rate), peak value during the calendar year (highest closing price × shares held on that date × applicable Rule 115 rate), and closing value on December 31.

The peak value is the most frequently misreported field. Fidelity's December 31 statement shows the closing balance — it does not show you the peak. You need daily share prices and daily holdings data to compute this correctly.

Form 67 — Foreign Tax Credit on US Withholding

If Fidelity withholds US tax on dividend income from your RSU shares (typically 25% under US domestic law, reducible to 15% or 25% under the India-USA Double Taxation Avoidance Agreement), you can claim this as a foreign tax credit in India under Rule 128 of the Income Tax Rules 1962, by filing Form 67.

Form 67 must be filed before or along with the filing of ITR — not after. The credit is limited to the Indian tax payable on the same income. If the US withholding exceeds the Indian tax on the dividend, only the Indian tax amount is credited.

Dividends paid on shares held in Fidelity after the vest date are reported in your Fidelity 1099-DIV equivalent statement. Extract the gross dividend and the US tax withheld, convert both to INR at the Rule 115 rate, and report in Schedule OS (Other Sources) and Form 67 respectively.

Where Each Item Goes in ITR-2

Most Common Fidelity RSU Filing Errors

Using the wrong exchange rate. Some CAs use the transaction-date rate or the RBI reference rate. Both are wrong. The only legally correct rate for Indian tax computation is the SBI TT Buy rate on the last working day of the preceding month, per Rule 115.

Treating all lots as LTCG. If you have held shares for varying periods, some lots are STCG and some are LTCG. Each must be computed independently and declared in the correct sub-schedule of Schedule CG.

Skipping sell-to-cover in Schedule CG. This is a sale. It generates a capital gain or loss. Report it.

Using December 31 balance as A3 peak value. The closing balance and the peak value are rarely the same. The peak must reflect the highest single-day value during the calendar year.

Holding period from grant date. It starts from the vest date. Section 55(2)(fb) is clear on this. A grant in January 2022 that vested in March 2023 — the holding period starts March 2023.