AY 2026-27 Salary Plus ₹U and ESOP ITR Guide
₹U and ESOP income in an ITR-2 for AY 2026-27 involves at least three separate reporting questions, and most employees who get this wrong do so because they treat it as a single entry. The perquisite on vesting is salary income. The gain on subsequent sale is capital gains. If the shares are in a foreign company, the holding may also need disclosure in Schedule FA. This guide is for FY 2025-26 income and covers each layer.
How ₹U and ESOP income flows into the ITR
When ₹Us vest or ESOPs are exercised, the difference between the fair market value on the date of vesting or exercise and the exercise price (if any) is a perquisite — taxable as salary income. The employer is required to include this perquisite in Form 16 and deduct TDS accordingly.
When the employee later sells the shares, the gain from sale price over FMV on the vesting or exercise date is capital gains. The holding period and the nature of the shares (listed Indian, listed foreign, unlisted) determine the applicable rate and schedule.
The AIS will typically pick up the sale proceeds if the broker has reported the transaction. It may not show the perquisite separately from the rest of salary — so the reconciliation starts with Form 16.
Documents to keep ready
| Document | Why it matters |
|---|---|
| Form 16 | Keep the latest copy and match names, dates, and amounts before relying on it. |
| broker statement | Keep the latest copy and match names, dates, and amounts before relying on it. |
| vesting statement | Keep the latest copy and match names, dates, and amounts before relying on it. |
| foreign asset records | Keep the latest copy and match names, dates, and amounts before relying on it. |
| PAN and bank details | Useful for tax filing, refunds, benefit credits, and identity matching where applicable. |
| A short review note | Records what was checked, what is pending, and which official source was used. |
Checking Form 16 for perquisite disclosure
Open Form 16 Part B and look for the perquisite entry under salary income. Confirm the FMV used by the employer matches what is shown in the vesting statement from the employer or the broker. Discrepancies are more common than you might expect, especially where shares vested in multiple tranches across the financial year.
If TDS was not deducted fully — for example, because the shares vested when the employee was on leave without pay and TDS was limited by the employer's system — the shortfall is the employee's liability. That needs to be covered by advance tax or self-assessment tax before filing.
Capital gains from sale
For shares sold during FY 2025-26, you need the date of acquisition (vesting or exercise date), the FMV on that date, and the sale price. Compute the gain per lot if shares vested in tranches at different FMVs. Check whether the sale falls in the short-term or long-term category. For foreign shares, the gain is computed in rupees after converting at the telegraphic transfer buying rate for the relevant dates.
Cross-check sale proceeds shown in the broker statement against what AIS has captured. Where AIS shows a higher figure — for instance, because it picked up the gross sale value and you are computing net — note the difference and ensure the return position is explainable.
Schedule FA for foreign shares
If you held unvested ₹Us, vested but unsold shares, or ESOPs in a foreign company at any point during FY 2025-26, Schedule FA disclosure is required if you are a resident and ordinarily resident. This includes shares you hold in your name in a foreign broker account, even if the value is small.
Pre-filing checklist
- Confirm the official portal or Income Tax Department source before acting.
- Keep identity, bank, income, and scheme-specific documents in one folder.
- Match Form 16, AIS, Form 26AS, and broker statements against each other.
- Separately identify the perquisite (salary) component and the capital gains component.
- Check whether Schedule FA applies for any foreign shares held during FY 2025-26.
- Verify that advance tax or self-assessment tax has been paid if TDS shortfall exists.
- Use a CA or expert review where the ₹U or ESOP structure is complex or the amounts are significant.
Official sources
| Source | Link |
|---|---|
| Income Tax Department - AY 2026-27 ITR utilities | Open source |
| Income Tax Department - Income Tax Returns FAQs | Open source |
| Income Tax Department - Annual Information Statement | Open source |
| Income Tax Department - Tax Credit Mismatch FAQs | Open source |
| Income Tax Department - e-Verify Return FAQs | Open source |
MyeCA workflow
Use Form 16 parser as a preparation tool, then use Get Expert Tax Review if the file needs a document-based review. For adjacent reading:
What the reviewer should verify
A CA reviewing an ₹U/ESOP file should confirm: the Form 16 perquisite entry matches vesting records, the capital gains computation uses the correct acquisition cost and holding period dates, the AIS sale proceeds are reconciled, Schedule FA is complete where applicable, and the tax regime selection is consistent with the deductions claimed. All supporting documents should be kept in one folder alongside the filed ITR acknowledgement.
Frequently asked questions
Is this article a substitute for professional advice?
No. Use it as an educational checklist and get case-specific review where documents, income heads, or eligibility are unclear.
Which year does this AY 2026-27 guide cover?
AY 2026-27 generally relates to FY 2025-26 income, subject to the facts of the taxpayer and official filing utility rules.
What should I check before filing?
Check the ITR form, tax regime, AIS, Form 26AS, TDS certificates, bank details, and the documents supporting the income or deduction.
Final thought
₹U and ESOP income is one area where the AIS and Form 16 will almost never tell the complete story on their own. The perquisite, the capital gains, and the foreign asset disclosure each require a separate source document. Pull all three, reconcile them, and only then populate the ITR schedules.