Should I use FMV or the discounted purchase price as the ESPP initial value in Schedule FA?

If your employer taxed the ESPP discount as a perquisite in Form 16 (most do), use FMV on the purchase date × shares × SBI TTBR on that date as the Table A3 initial value. Using the discounted purchase price from the Fidelity CSV understates the initial value by the perquisite amount and is inconsistent with your Form 16.

What is the acquisition date for ESPP shares in Table A3?

The ESPP purchase date — the end of the offering period when the shares were bought — not the offering start date or grant date. Each offering period's purchase gets its own Table A3 row.

Where do I find the FMV on the ESPP purchase date?

From your Fidelity ESPP purchase confirmation or Form 1099-B (both show fair market value on the purchase date), or the closing stock price on that date. ITRFA.in fetches the historical closing price automatically when you upload your Open Lots CSV.

How is ESPP taxed differently from RSU?

An RSU has the full FMV of vested shares taxed as perquisite at vest date. An ESPP only has the discount (FMV minus the price you actually paid) taxed as perquisite, at the purchase date — since you paid part of the value yourself. Once past acquisition, both use FMV at that acquisition date as the Table A3 initial value and capital gains cost basis.

ESPP Schedule FA India — FMV vs Purchase Price, Table A3 Initial Value

8 min read · Updated July 2026 · Applies to AY 2025-26 and AY 2026-27

The most common ESPP mistake: Using the discounted purchase price from the Fidelity CSV as Table A3 initial value. If your employer reported the ESPP discount as perquisite in Form 16 (most do), you must use FMV on purchase date instead. Using the discounted price understates your initial value and creates an incorrect cost basis.

Contents

RSU vs ESPP — where taxation actually differs
ESPP basics — offering period, purchase date, discount
How India taxes ESPP
FMV vs purchase price — which to use and why
Table A3 fields for ESPP shares
How to find FMV on purchase date
What Fidelity CSV reports — and why it's not enough
What if employer did NOT tax the discount?

In a hurry? Skip the FMV-vs-price debate — upload your Open Lots CSV and ITRFA.in applies the correct ESPP initial value automatically. Upload now →

RSU vs ESPP — Where Taxation Actually Differs

Both are eventually taxed the same way — perquisite at acquisition, capital gains at sale — but they differ in when and what is taxed at acquisition:

	RSU	ESPP
What's taxed at acquisition	Full FMV of vested shares	Only the discount (FMV − purchase price), not the full FMV
When	Vest date	Purchase date (end of offering period)
Do you pay anything out of pocket?	No — shares are granted free	Yes — you pay the discounted purchase price
Table A3 acquisition date	Vest date	Purchase date
Table A3 initial value	FMV at vest × shares	FMV at purchase × shares (if discount was taxed — see below)
Capital gains cost basis on sale	FMV at vest	FMV at purchase (same logic — the discount was already taxed as salary)

In other words: an RSU has no "discount" concept — the whole value is perquisite income. An ESPP separates the deal you got (the discount, taxed as salary) from what you paid (the purchase price, which isn't taxed again). Once each is past the acquisition event, Schedule FA and capital gains treatment converge on the same logic: initial value / cost basis = FMV at the acquisition date, not what you actually paid.

Section 49(2AA): the cost of acquisition for capital-gains purposes on a specified security allotted under an ESPP (or ESOP) is the FMV already taken into account for the Section 17(2)(vi) perquisite computation at purchase — not the price actually paid. (Verified against the Income Tax Department's own published text of Section 49.) See our Schedule CG guide for the capital-gains side of this when the lot is later sold.

1. ESPP Basics — Offering Period, Purchase Date, Discount

An Employee Stock Purchase Plan (ESPP) lets employees buy company stock at a discount — typically 10–15% below the lower of the stock price at the start or end of an offering period (usually 6 or 12 months).

Example (typical 15% discount ESPP):
Offering period: Jan 1 2025 – Jun 30 2025
Stock price at offering start: $180.00
Stock price at purchase date (Jun 30): $200.00
Purchase price = 85% × lower of [$180, $200] = 85% × $180 = $153.00
FMV on purchase date = $200.00
Discount element = $200.00 − $153.00 = $47.00 per share

2. How India Taxes ESPP

Indian tax treatment of ESPP has two stages:

At purchase date — perquisite taxation. The discount element (FMV − purchase price) is taxable as perquisite under Section 17(2) of the Income Tax Act, just like RSU vesting. Your employer should deduct TDS on this amount and report it in Form 16 Part B under "Value of perquisites u/s 17(2)".

Most Indian employers who have ESPP programs do tax the discount. Verify by checking your Form 16 — look for a line item around purchase date for ESPP perquisite value.
At sale date — capital gains. When you sell the ESPP shares, capital gains = Sale price − Cost of acquisition. Since the discount was already taxed as perquisite, the Indian cost of acquisition = FMV on purchase date (not the discounted purchase price). This avoids double taxation.

3. FMV vs Purchase Price — Which to Use and Why

Scenario	Table A3 Initial Value	Indian Cost of Acquisition
Employer taxed discount in Form 16 (most common)	FMV on purchase date × shares × SBI TTBR	FMV on purchase date (discount already taxed as salary)
Employer did NOT tax discount in Form 16	Discounted purchase price × shares × SBI TTBR	Purchase price (you'll pay perquisite tax later or it was genuinely not taxable)

Why FMV is the correct initial value when employer taxed the discount:

Schedule FA Table A3 "Initial Value of Investment" represents what you paid (in Indian tax terms) to acquire those shares. Since the discount was included in your taxable salary income, you effectively paid FMV for the shares — the discount is the employer's contribution, already recognised as income and taxed. Using the discounted purchase price understates the initial value by the perquisite amount, creating an inconsistency with your Form 16.

Capital gains note: If you later sell ESPP shares, the same logic applies to cost of acquisition for capital gains computation. Use FMV on purchase date (if taxed as perquisite) to avoid double-taxation of the discount amount.

4. Table A3 Fields for ESPP Shares

Table A3 Field	What to Enter
Country Name and Code	`2-UNITED STATES OF AMERICA` (dropdown selection, not a typed code)
Name of Entity	Your employer's company name (e.g. ServiceNow Inc)
Nature of Interest	ESPP shares — [N] shares purchased [DD/MM/YYYY]
Date of Acquiring	ESPP purchase date (end of offering period)
Initial Value of Investment (INR)	FMV on purchase date × shares × SBI TTBR on purchase date
Peak Value (INR)	Proportional share of peak portfolio value × SBI TTBR
Closing Value (INR)	Shares × Dec 31 stock price × SBI TTBR Dec 31
Total Gross Amount Paid/Credited (INR)	0 (dividends go in Table A2)

If you have ESPP purchases from multiple offering periods (e.g. Jan–Jun and Jul–Dec), each purchase date gets its own Table A3 row.

5. How to Find FMV on Purchase Date

FMV = closing stock price on the ESPP purchase date (or nearest preceding trading day if purchase date was a weekend/holiday).

Sources:

Fidelity ESPP Purchase Confirmation — shows "fair market value" per share on purchase date. Check your Fidelity account under Stock Plan → Activity → ESPP Purchases.
Form 1099-B or ESPP Statement — FMV on purchase date is reported here by Fidelity for US tax purposes.
Yahoo Finance / Google Finance — look up the closing price on the purchase date for the stock ticker.
ITRFA.in — fetches historical closing price from yfinance automatically when you upload your Open Lots CSV.

6. What Fidelity CSV Reports — And Why It's Not Enough

The Fidelity Open Lots CSV has a "Cost basis/share" column. For ESPP lots (Share source = "SP"), this column shows the discounted purchase price — what you actually paid out of pocket, not FMV.

Example from Fidelity Open Lots CSV:
Date acquired: Jun-30-2025 | Quantity: 25 | Cost basis/share: $153.00 | Share source: SP

The $153.00 is the discounted purchase price. FMV on Jun 30, 2025 was $200.00.
Correct initial value = 25 × $200.00 × ₹84.50 = ₹4,22,500
Incorrect (using CSV cost basis) = 25 × $153.00 × ₹84.50 = ₹3,23,213

This is a ₹99,287 understatement of initial value in this single lot. Across multiple ESPP purchases over several years, the difference becomes significant.

That ₹99,287 gap is exactly what ITRFA.in catches — it fetches FMV automatically instead of trusting the CSV's cost-basis column. Try it free →

7. What If Employer Did NOT Tax the Discount?

Some employers — particularly those with smaller Indian teams or older payroll setups — may not have correctly taxed the ESPP discount as perquisite. In this case:

Your Form 16 may not show any ESPP perquisite income
You may have a tax liability you haven't settled
For Schedule FA, using the purchase price (what you actually paid) is technically defensible

However, you should verify with your CA. If the discount was not taxed and should have been, you may need to file a revised return or pay advance tax. Using FMV as the initial value in this scenario would be inconsistent with your Form 16 and could create capital gains computation issues at sale time.

ITRFA.in gives you a toggle on the review screen to choose FMV (recommended) or CSV purchase price — use the right one based on your Form 16.

ESPP initial value computed automatically

ITRFA.in detects ESPP lots from your Open Lots CSV, fetches FMV from yfinance, and lets you toggle between FMV and purchase price on the review screen.

Generate your ESPP Schedule FA →

Fidelity → Schedule FA →
Full walkthrough, all tables

RSU Schedule FA →
Vest date, multiple lots

SBI TTBR Rule 115 →
Exact date rate, how to look up