Every salaried employee gets a Form 16 at the end of the financial year. But if your RSUs vested during the year, your Form 16 will have a large number under perquisites that was not there before.
This guide explains what that number is, how your employer calculated it, and what you do with it when you file your ITR-2.
Table of contents
- What is Form 16?
- Where does RSU income show up?
- How does your employer calculate the perquisite value?
- What TDS is deducted?
- How do you verify the number?
- What flows from Form 16 into your ITR-2?
- How Paasa helps
What is Form 16?
Form 16 is the TDS certificate your employer issues at the end of each financial year. It is proof that tax was deducted from your salary and deposited with the government on your behalf.
It has two parts.
Part A is the TDS certificate. It shows how much tax your employer deducted and deposited with the government each quarter, along with your employer's TAN and your PAN.
Part B is the detailed salary breakdown. It shows your gross salary, all deductions, and a line-by-line breakdown of what makes up your total taxable income. This is where your RSU income appears.
Where does RSU income show up?
In Part B, under the perquisites section.
When your RSUs vest, the shares are treated as a perquisite under the Income Tax Act. Your employer is required to calculate the rupee value of those shares and include it in your salary for that financial year. The total figure — covering all tranches that vested during the year — appears as a single line under perquisites in Part B.
This is distinct from your regular salary. On your Form 16, you will typically see your cash salary on one line and the perquisite value on another. Both are included in your gross taxable salary.
How does your employer calculate the perquisite value?
For each tranche that vests, the formula is:
FMV on vest date × number of shares vested × SBI TTBR on the last day of the preceding month
If you had multiple tranches vest across the year, each is calculated separately using the vest date and the applicable rate for that month. The individual figures are then added together to arrive at the total perquisite value on your Form 16.
Why the SBI TTBR is used and how to find it
Example
Suppose 25 Google shares vest on June 10, 2025, and another 25 shares vest on December 10, 2025.
Tranche 1 — June 10, 2025:
| Amount | Note | |
|---|---|---|
| FMV on vest date (A) | $170 per share | |
| Total USD value | $4,250 | 25 shares × $170 |
| SBI TTBR on May 31, 2025 (B) | ₹84.50 per dollar | Last day of month preceding June |
| Perquisite value — Tranche 1 | ₹3,59,125 |
Tranche 2 — December 10, 2025:
| Amount | Note | |
|---|---|---|
| FMV on vest date (A) | $315 per share | |
| Total USD value | $7,875 | 25 shares × $315 |
| SBI TTBR on November 30, 2025 (B) | ₹85.80 per dollar | Last day of month preceding December |
| Perquisite value — Tranche 2 | ₹6,75,675 |
Total perquisite value on Form 16: ₹10,34,800
This is the figure that appears in the perquisites section of your Part B.
What TDS is deducted?
Your employer deducts TDS on the perquisite value at the time of vesting, at your applicable income tax slab rate.
So if you are in the 30% bracket, TDS is calculated at 30% on the perquisite value of each tranche on the day it vests. This is included in the total TDS your employer deposits with the government and shows in Part A of your Form 16.
You do not need to pay any separate tax on the perquisite at the time of filing. The TDS already deducted is treated as advance tax and adjusted against your total tax liability for the year.
How do you verify the number?
Cross-check using the formula above.
Look up the FMV of your company's stock on each vest date, find the SBI TTBR for the last day of the preceding month, and multiply. If you had multiple tranches, do it for each and add them up.
Small differences between your calculation and Form 16 are normal. They usually come from rounding or minor differences in the FMV source your employer used.
A large discrepancy is worth raising with your HR or payroll team before you file. The perquisite value on Form 16 becomes your cost of acquisition for capital gains purposes, so an error here carries forward.
What flows from Form 16 into your ITR-2?
Three things.
Your total salary (including the perquisite) flows into Schedule S in your ITR-2. You do not enter the perquisite separately. The gross salary figure from Part B, which already includes the perquisite, is what goes in.
The TDS amount from Part A flows into the tax credits section of your ITR-2. This is the amount your employer already deposited with the government on your behalf and gets adjusted against your final liability.
The perquisite value becomes your cost of acquisition. When you eventually sell the shares, your cost of acquisition for the capital gains calculation is the rupee value of the shares on vest day — the same figure your employer used for Form 16. You are not taxed on that amount again.
How capital gains are calculated when you sell your RSU shares
How Paasa helps
Paasa records every RSU vest with the correct FMV and conversion rate, so you have a clean transaction history when it is time to file. You do not need to manually cross-reference your broker statement against SBI rates or reconcile multiple tranches at the end of March.
