Schedule CG for RSU & ESPP Sales — STCG, LTCG & the Exchange Rate

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

1. What Schedule CG Covers

Schedule CG (Capital Gains) is where you report the gain or loss on any capital asset you sold during the Indian financial year (April–March) — including RSU and ESPP shares sold through a US broker. If a lot was sold, closed, or sell-to-covered at any point during the FY, the difference between what you received and your cost of acquisition is a capital gain (or loss), and it belongs here — separately from Schedule FA.

2. STCG vs LTCG — The 24-Month Unlisted-Security Threshold

Held (from acquisition/vest date to sale date) for more than 24 months → long-term capital gain (LTCG). Held for 24 months or less → short-term capital gain (STCG). The acquisition date is the vest date for RSUs and the purchase date for ESPP — never the grant date.

3. Which ITR-2 Section Applies

Both fall into the residual "other assets" bucket, not Sections 111A/112A — those apply only to securities transaction tax (STT)-paid shares listed on a recognised Indian exchange, which US RSU/ESPP shares never are. Section 112's LTCG treatment here carries no indexation benefit, per the Finance (No. 2) Act 2024's removal of indexation for transfers on or after 23 July 2024. Every FY 2025-26 (AY 2026-27) sale falls under this no-indexation regime; if you're filing AY 2025-26 and sold before 23 July 2024, the older 20%-with-indexation regime applied to that sale instead — check with your CA.

4. ESPP Cost of Acquisition — FMV, Not the Discounted Price Paid

An RSU vest has no discount — the full FMV at vest is taxed as perquisite, and that same FMV is the cost of acquisition when you later sell. An ESPP purchase is different: you pay a discounted price out of pocket, and only the discount (FMV minus what you paid) gets taxed as perquisite at purchase, typically via Form 16. Our ESPP Schedule FA guide covers this split in full for Table A3's Initial Value — the same rule governs Schedule CG's cost of acquisition when that lot is later sold.

Using the discounted purchase price as cost basis instead of FMV understates your cost of acquisition — and overstates the capital gain by exactly the discount amount. Since that discount was already taxed once as salary perquisite, taxing it again via an inflated capital gain is a genuine double taxation, not a rounding difference. A 15% ESPP discount on a large sale can mean paying capital-gains tax on a discount you never actually profited from a second time.

This depends on your employer having actually taxed the discount as perquisite in Form 16 (the normal case for a qualified ESPP administered from India-based payroll). If your employer did not tax the discount, the discounted price you paid is the correct cost basis instead — the same either/or choice ITRFA.in's review page offers for Table A3, applied consistently to Schedule CG too.

5. The Exchange Rate — Rule 115(1)(f), Not Schedule FA's Rule

This is where Schedule CG and Schedule FA diverge in a way that trips up even careful filers. Schedule FA uses the exact-date SBI TTBR — see the full Rule 115 explainer for why that specific rule is often miscited. Schedule CG uses a genuinely different provision:

Both figures in the gain computation use this same rate — proceeds and cost of acquisition alike — because Rule 115 assigns one specified date per head of income, not a separate date for each number that feeds into it. This is different from how Schedule FA's Table A3 initial value works, which uses the exact acquisition date.

6. Schedule FA vs Schedule CG — Both, Not Either

A sold lot needs both entries — Schedule FA doesn't compute tax on the gain, and Schedule CG doesn't disclose the asset was held. Skipping either is incomplete, not just imprecise.

7. Worked Example

8. Net Capital Loss — Set-Off and Schedule CFL Carry-Forward

A losing lot isn't necessarily wasted, but it isn't automatic either. Section 70 governs same-year set-off within the capital gains head:

• A short-term capital loss (STCL) sets off against any capital gain that year — short-term or long-term.
• A long-term capital loss (LTCL) sets off only against a long-term gain that year — it cannot reduce a short-term gain.

If STCL and LTCG both exist in the same year, the loss reduces the gain and only the net figure is taxed. But if a term's net position after set-off is still negative — you have more capital loss than capital gain to absorb it — that bucket's current-year taxable capital gains income is reported as ₹0 (a negative income figure isn't a valid entry), and the unabsorbed loss doesn't just disappear.

9. Quarterly Accrual and Advance Tax

Schedule CG also asks when in the financial year each gain accrued, broken into the same five advance-tax instalment windows used elsewhere in the ITR (up to 15 Jun, 16 Jun–15 Sep, 16 Sep–15 Dec, 16 Dec–15 Mar, 16 Mar–31 Mar). This feeds Section 234C, which charges interest for underpaying an advance-tax instalment — but exempts capital gains income that hadn't yet accrued at the time of an earlier instalment, since you couldn't have paid advance tax on a gain you hadn't realised yet. A single large sale late in the year, correctly dated to the last window, shouldn't trigger 234C interest for the earlier quarters.

10. Common Mistakes

• Skipping Schedule CG because Schedule FA already shows the sale proceeds — Schedule FA discloses the asset, it doesn't compute or tax the gain.
• Using the broker's discounted purchase price as cost basis for a sold ESPP lot — Section 49(2AA) requires the FMV already taxed as perquisite instead, overstating the gain by the discount and double-taxing it.
• Using the 12-month listed-equity threshold instead of 24 months for unlisted foreign shares — misclassifying LTCG as STCG or vice versa.
• Approximating the 24-month threshold as 730 days — wrong whenever the hold spans a leap year; use calendar months, not a day count.
• Applying Section 111A/112A's flat rate (meant for STT-paid Indian listed shares) instead of slab rate (STCG, Section 48) or the no-indexation Section 112 rate (LTCG).
• Reusing Schedule FA's exact-date rate for the capital gains computation, instead of Rule 115(1)(f)'s last-day-of-preceding-month rate — the two schedules use genuinely different exchange rate rules.
• Converting cost of acquisition and proceeds at two different dates — Rule 115(1)(f) gives one specified date per lot, not one for each figure.
• Letting a net loss year's return slip past the Section 139(1) due date — forfeits the right to carry that loss forward via Schedule CFL, even though the return is otherwise valid.