Missed the July 31 ITR-2 deadline with RSUs? Here's exactly what to do

The July 31 deadline passed. You haven't filed your ITR-2 yet. You hold US RSUs and know you need Schedule FA, Form 67, and all the SBI TTBR conversions — and the whole thing feels complicated enough that it slipped past the deadline.

Here's the short answer: you can still file. The consequences are real but manageable. This article tells you exactly what they are and what to do.

What "belated return" means

A belated return is an ITR filed after the original due date (July 31 for non-audit cases) but before December 31 of the assessment year. It is filed under Section 139(4) of the Income Tax Act.

For AY 2026-27, the belated return window is August 1, 2026 to December 31, 2026.

After December 31, the only option is an Updated Return (ITR-U) under Section 139(8A), which is more expensive (25–50% surcharge on the outstanding tax) and is worth avoiding if at all possible.

What a belated return costs you

Section 234F: the flat late fee

Your total income	Late fee
Above ₹5 lakh	₹5,000
₹5 lakh or below	₹1,000

This is fixed. It doesn't matter whether you file on August 1 or December 30 — the Section 234F fee is the same. It cannot be waived by the CPC or by representation. Add it to your self-assessment tax challan (under "Others" or "Fee u/s 234F") when paying.

Most RSU holders with salaried income and US capital gains will have total income well above ₹5 lakh, so the applicable fee is ₹5,000.

Section 234A: interest on unpaid tax

If you had tax due on July 31 (i.e., TDS and advance tax together didn't cover your full liability), you owe 1% per month interest on the outstanding amount from August 1 until the date of actual payment.

Example: you owed ₹1,20,000 in self-assessment tax on July 31 and file on October 15 — that's 2.5 months at 1%, so ₹3,000 in Section 234A interest.

The interest is computed automatically when you fill the self-assessment tax computation on the ITD portal.

Section 234B: advance tax shortfall

If you didn't pay adequate advance tax during the year (most salaried employees with RSU income are caught here — the employer deducts TDS on salary but RSU capital gains often go unpaid), Section 234B applies at 1% per month on the shortfall from April 1 of the assessment year. The advance tax guide for RSU holders explains how to compute the four installments and avoid Section 234C interest next year.

This runs separately from 234A and compounds quickly if the RSU capital gains were substantial.

What you lose

• Carry-forward of capital losses. A belated return cannot carry forward capital losses to future years. If you sold RSU shares at a loss in FY 2025-26, that loss can offset gains in the same year in the belated return — but it cannot be carried forward to FY 2026-27. This is a real cost if you have significant unrealised gains in future years.
• Certain deductions. Some deductions (Chapter VI-A like 80C, 80D) remain claimable in a belated return. Most standard deductions still apply.

The Schedule FA question: does late filing create Black Money Act risk?

This is the most common fear among RSU holders who missed the deadline. The answer requires separating two things:

Filing Schedule FA late (in a belated return) ≠ non-disclosure.

The Black Money (Undisclosed Foreign Income and Assets) Act, 2015 penalises the concealment or non-disclosure of foreign assets. The penalty under Section 42 of the Act is ₹10 lakh per undisclosed asset. "Undisclosed" means not reported at all — not "reported late."

A belated ITR-2 that includes a complete, accurate Schedule FA is a disclosure. It is late, but it is a disclosure. The risk of a Black Money Act penalty is materially lower than if you file a return with no Schedule FA or don't file at all.

The practical guidance:

1. File the belated return with full Schedule FA as soon as possible
2. Do not omit Schedule FA to simplify the return — that's the actual risk
3. If you previously filed a return without Schedule FA, file a revised return (before July 31) or a belated return (between August 1 and December 31) that includes it

Step-by-step: filing your belated ITR-2 with RSU income

Step 1: Gather your documents

Document	Source	Purpose
Broker statements (Morgan Stanley, Fidelity, E*Trade)	Employer stock plan portal	Vest dates, gross values, sale proceeds
Form 16 (Part A and Part B)	Employer HR/payroll	Salary income, TDS deducted
SBI TTBR rates for all vest and sale dates	SBI website → TTBR historical	INR conversion for Schedule FA, Schedule CG
Form 26AS / AIS	ITD portal → e-File → View AIS	Verify TDS credits and income already captured
1042-S (if dividends received)	Stock plan portal → Tax Documents	Form 67 FTC claim for US withholding on dividends

Step 2: Compute the self-assessment tax

Use the late ITR filing interest calculator to estimate your Section 234F fee, Section 234A interest, and Section 234B interest before you open the ITD portal.

Before filing, calculate the full tax liability:

• Salary income (perquisite at vest + other salary from Form 16)
• Capital gains on RSU sales (Schedule CG: sale proceeds − cost basis, both in INR)
• Dividend income if any (Income from Other Sources)
• Less: TDS already deducted (from Form 26AS)
• Less: FTC credit from Form 67 (US withholding on dividends)
• Add: Section 234F fee (₹5,000)
• Add: Section 234A interest (1% × months late × outstanding tax as of July 31)
• Add: Section 234B interest (if advance tax shortfall)

Pay the self-assessment tax via Challan 280 on the ITD portal (e-Pay Tax) before submitting the return. The BSR code and challan number will be required in the return.

Step 3: File Form 67 first

If you have dividends and a 1042-S, file Form 67 (Foreign Tax Credit claim for AY 2026-27) on the ITD compliance portal before or simultaneously with the ITR-2. Form 67 filed after the ITR-2 may result in the FTC being disallowed. (Form 44 replaces Form 67 from AY 2027-28 under the new Income-tax Act 2025.)

Step 4: File the belated ITR-2

Log into the ITD e-filing portal → File Income Tax Return → Assessment Year 2026-27 → ITR-2 → Online.

In the filing type field, select 139(4) — Belated Return. (If you had previously filed a defective or nil return, the option may be 139(5) — Revised Return instead; consult your CA if unsure.)

Complete all schedules:

• Schedule S: Salary income including perquisite
• Schedule CG: Capital gains on RSU sales
• Schedule FA: All foreign assets held during Jan 1–Dec 31, 2025
• Schedule FSI: Foreign-source income (dividends, capital gains)
• Schedule TR: Tax relief (FTC from Form 67)

Step 5: E-verify within 30 days

After submitting, e-verify the return within 30 days using Aadhaar OTP, net banking, or DSC. An unverified return is treated as not filed.

What if you can't file before December 31?

If December 31 passes without filing, the belated return window closes. Your only option becomes the Updated Return (ITR-U) under Section 139(8A):

• Can be filed up to 2 years from the end of the assessment year (i.e., March 31, 2029 for AY 2026-27)
• Requires paying an additional 25% of tax + interest if filed within 12 months of the assessment year end (i.e., by March 31, 2027), or 50% of tax + interest thereafter
• ITR-U cannot be used to claim a refund — only to pay additional tax

The ITR-U surcharge makes it significantly more expensive. A belated return by December 31 is strongly preferable.

RSU-specific implications of belated filing

For RSU holders specifically, a belated return has several implications beyond the general costs that apply to all late filers.

Schedule FA: mandatory even in belated return

Schedule FA (Foreign Assets disclosure) is not optional in a belated return. Under the Black Money (Undisclosed Foreign Income and Assets) Act, 2015, the obligation to disclose foreign assets exists regardless of whether the return is timely or belated. If you held US employer stock, a US brokerage account, or RSU shares in a US plan on any date during calendar year 2025 (January 1 to December 31, 2025), Schedule FA must be included in your belated ITR-2.

What Schedule FA requires for RSU holders:

• Foreign brokerage account: peak value during the year and closing value on December 31, 2025 (in INR, using SBI TTBR)
• Each RSU holding separately: peak value during 2025, number of shares, cost basis
• If shares vested and were sold within 2025, still disclose — the account existed during the year
• If the brokerage account balance was zero on December 31 (all sold), still report — the account was held during the year

Filing a belated return without Schedule FA to simplify the return is the riskiest possible approach. The Section 42 penalty under the Black Money Act for non-disclosure of a foreign asset is ₹10 lakh per asset — vastly larger than the ₹5,000 Section 234F late fee you are trying to avoid the complexity of.

Form 44 / Form 67: foreign tax credit in belated return

For RSU holders who received US dividends from held ETF positions or interest income taxed in the US, the foreign tax credit (FTC) mechanism applies:

• AY 2026-27: Use Form 67 (Form 44 replaces it from AY 2027-28 under the new Income-tax Act 2025)
• Form 67 must be filed before or simultaneously with the belated ITR-2, not after
• The FTC for US withholding tax on dividends (30% US WHT, reduced to 15% under DTAA for eligible dividends) can still be claimed in a belated return
• File Form 67 on the ITD compliance portal on the same day as the belated ITR-2

The DTAA Article 10 angle: Under the India-US Double Tax Avoidance Agreement, dividend withholding is capped at 15% (for holdings ≥10% of shares) or 25% for other dividends. However, for NRAs holding ETFs (portfolio investment, not substantial holding), the standard rate is 30% US WHT. Indian residents can claim FTC of the lower of: (a) US tax paid, (b) Indian tax on the same income. The FTC claim in Form 67 is available in a belated return.

Capital loss carry-forward: the most costly consequence for TLH practitioners

This is the most important and least-discussed consequence of late filing for RSU holders who practise tax-loss harvesting.

What you lose: If you harvested STCG losses from ETF sales during FY 2025-26 (e.g., sold VOO at a loss and repurchased CSPX), those losses can be set off against gains within the same year even in a belated return. But they cannot be carried forward to future years in a belated return.

Under Section 80 of the Income Tax Act: Capital losses can be carried forward for set-off in subsequent years only if the return is filed by the due date (July 31). A belated return loses the carry-forward benefit, though it retains the same-year set-off.

The practical impact:

• STCG loss of ₹2 lakh harvested in November 2025 → can offset ₹2 lakh STCG gain from December 2025 RSU sale in the belated return ✓
• The same ₹2 lakh STCG loss → cannot offset ₹2 lakh STCG gain from RSU sale in July 2026 (FY 2026-27) if you file a belated return for AY 2026-27 ✗

For an RSU holder with a systematic TLH programme — harvesting ₹1–3 lakh in STCG losses each year — losing the carry-forward costs an additional ₹31,200–93,600 in taxes in the following year (at 30% slab + cess). This is a real cost that compounds over time.

This is the single most important reason RSU holders should never miss the July 31 deadline.

Step-by-step belated ITR-2 filing on the income tax portal

If you have missed the deadline, here is the precise sequence to follow on the ITD e-filing portal:

Phase 1: Pre-filing preparation (1–3 days)

1. Download broker statements from your US employer stock plan portal (Morgan Stanley, Fidelity, E*Trade, Schwab, Rovia)
2. Obtain SBI TTBR rates for all vest dates and sale dates during FY 2025-26 (April 1, 2025 to March 31, 2026) from the SBI website → TTBR historical rates
3. Compute INR perquisite value at each vest: shares vested × vest-date USD price × SBI TTBR on vest date
4. Compute INR capital gain for each lot sold: (sale price × TTBR on sale date) − (vest price × TTBR on vest date)
5. Download Form 26AS and AIS from ITD portal to verify TDS already credited

Phase 2: Tax computation (1 day)

6. Total salary income = employer salary from Form 16 + RSU perquisite income from step 3
7. Total capital gains = sum of all lot gains/losses from step 4 (separate STCG and LTCG)
8. Compute tax liability using ITD's tax calculator
9. Subtract TDS already paid (from Form 26AS)
10. Add Section 234F fee (₹5,000 for income above ₹5 lakh)
11. Add Section 234A interest: 1% per month × outstanding tax × months since July 31
12. Add Section 234B interest if advance tax was underpaid
13. Pay self-assessment tax via Challan 280 (e-Pay Tax on ITD portal); note the BSR code and challan number

Phase 3: Form 67 filing (before or same-day as ITR)

14. If you received US dividends with WHT, file Form 67 on the ITD compliance portal
15. Form 67 requires: name of country (USA), nature of income (dividends), amount of foreign tax paid (USD WHT), exchange rate, Indian tax on the same income
16. Note the submission reference number

Phase 4: ITR-2 filing

17. Log into ITD e-filing portal → e-File → Income Tax Returns → File Income Tax Return
18. Select AY 2026-27 → ITR-2 → Online mode
19. Filing type: Section 139(4) — Belated Return
20. Fill Schedule S (salary), Schedule CG (capital gains with lot details), Schedule FA (foreign assets), Schedule FSI (foreign-source income), Schedule TR (tax relief/FTC)
21. Enter self-assessment tax challan details from step 13
22. Preview and submit
23. E-verify within 30 days (Aadhaar OTP preferred; net banking or DSC also valid)

Phase 5: Post-filing

24. Download the ITR-V (acknowledgement) and keep for 7 years
25. Monitor the ITD portal for any defect notice under Section 143(1)
26. If a defect notice arrives, respond within 15 days

Penalty calculation examples

Example 1: Simple RSU holder, no advance tax issue

• Total income: ₹18 lakh (₹14L salary + ₹4L STCG from RSU sales)
• TDS deducted: ₹3.5 lakh (employer TDS on salary + perquisite)
• Tax liability: ₹3.8 lakh (approx at 30% slab)
• Outstanding tax on July 31: ₹30,000
• Files belated return on October 15 (2.5 months late)
• Section 234F: ₹5,000
• Section 234A: ₹30,000 × 1% × 3 months = ₹900
• Total extra cost: ₹5,900

Example 2: RSU holder with large capital gains and TLH losses

• Total income: ₹32 lakh (₹22L salary + ₹15L STCG − ₹5L STCG losses from TLH)
• Net STCG: ₹10L; tax at ~30% = ₹3.12L
• TDS deducted: ₹1.5L; outstanding tax July 31: ₹1.62L
• Files belated return on December 20 (4.5 months late)
• Section 234F: ₹5,000
• Section 234A: ₹1,62,000 × 1% × 5 months = ₹8,100
• Lost carry-forward of ₹5L STCG losses → next year STCG tax cost: ₹1,56,000 (at 31.2%)
• Total extra cost: ₹1,69,100 — mostly from lost carry-forward, not from 234F/234A

The one thing not to do

Don't file a simplified return without Schedule FA to avoid complexity. The Black Money Act exposure from non-disclosure of foreign assets (even through omission, not intent) is far more serious than the Section 234F late fee. File a complete return, even if it takes another few weeks to gather all the TTBR conversions.

Summary: belated return cost for a typical RSU holder

Cost	Amount
Section 234F late fee	₹5,000 (flat)
Section 234A interest (if tax was owed on July 31)	1% × months × outstanding tax
Section 234B interest (if advance tax was short)	1% × months × shortfall
Loss of capital loss carry-forward	Loses carry-forward to future years
Black Money Act risk	Low if Schedule FA is complete and included

File now. Every additional month adds more 234A interest and brings you closer to the December 31 hard stop.