# RSU Taxation in India: Vesting, Sale and Schedule FA > How RSUs are taxed in India: perquisite tax at vesting, capital gains on sale, foreign-listed shares, Schedule FA disclosure and foreign tax credit. Source: https://trykosh.com/learn/rsu-taxation-india Guide - Equity compensation # RSU taxation in India, including foreign-listed shares RSUs from a US-listed parent are now a big part of pay at many Indian tech companies. They are taxed as salary when they vest, as capital gains when you sell, and they bring reporting duties that catch people out. Here's the whole cycle. Updated 30 October 20266 min readBy the Kosh team On this page[How RSUs are taxed, in two stages](#two-stages)[How the tax is collected at vesting](#collection)[Worked example: a vest on a INR 40 lakh salary](#worked-example)[Capital gains on RSU shares](#capital-gains)[Dividends and foreign tax credit](#dividends)[Schedule FA: reporting the shares themselves](#schedule-fa)[Moving countries with unvested RSUs](#moving)[A yearly RSU checklist](#checklist)[FAQs](#faq) ## How RSUs are taxed, in two stages A restricted stock unit is a promise of shares that vest over time. Unlike an option, you usually pay nothing for them. For a resident employee in India: 1. **At vesting**, when the shares are transferred to you, their full fair market value is a **perquisite**, taxed as salary at your slab rate plus surcharge and cess, in either regime. Your Indian employer adds it to your taxable salary and deducts TDS. 2. **At sale**, the difference between the sale value and the value that was taxed at vesting is a **capital gain**. Your cost is the vest-date value, not zero. Grant alone isn't taxed. Unvested units aren't yours yet and aren't income. ## How the tax is collected at vesting Employers handle the TDS on vested RSUs in one of two ways. With **sell-to-cover**, the broker sells enough of the vested shares at once to fund the Indian TDS and you receive the rest. With **payroll recovery**, all the shares land in your account and the TDS is taken from your cash salary, which can wipe out most of a month's pay in a big vest. Ask HR which your plan uses. The vest value is converted to rupees by your employer and shown in Form 16 and the perquisite statement. Keep the vest confirmations from the broker; you'll need the per-share value in rupees to work out your capital gain. ## Worked example: a vest on a INR 40 lakh salary Rohan earns INR 40 lakh at the Indian arm of a US company and files in the new regime. His salary tax is **INR 7,87,800**. During the year, RSUs worth **INR 12,00,000** vest. - His taxable income rises to INR 51.25 lakh, crossing the INR 50 lakh surcharge line, so 10% surcharge now applies to his **whole** tax, not just the RSU slice. - Total tax becomes INR 12,53,200. The vest costs **INR 4,65,400**, about 39% of its value, against 31.2% for a INR 12 lakh vest that stayed under the line. - Thirty months later he sells the shares for INR 16,00,000 (converted to rupees). Shares of a foreign company are treated like unlisted shares in India: long-term after 24 months, at **12.5% without the INR 1.25 lakh exemption**. On the INR 4,00,000 gain the tax is **INR 52,000** including cess. - Had he sold within 24 months, the INR 4 lakh would have been added to his income at 30% plus cess: **INR 1,24,800**. Run your own vest through the [ESOP tax calculator](/tools/esop-tax-calculator), which handles RSUs with a zero exercise price, and see the surcharge effect in the [surcharge calculator](/tools/surcharge-calculator). ## Capital gains on RSU shares Capital gains on RSU shares for a resident, FY 2026-27 (plus surcharge, capped at 15%, and 4% cess) Where the shares are listed Long-term after Short-term Long-term An Indian stock exchange 12 months 20% 12.5% above INR 1.25 lakh a year A foreign exchange only (Nasdaq, NYSE and others) 24 months Your slab rate 12.5%, no indexation, no INR 1.25 lakh exemption Each vest is a separate lot with its own date and cost. Gains are worked out in rupees, so a weaker rupee between vest and sale adds to your taxable gain. The income-tax rules prescribe exchange rates for converting foreign-currency amounts (generally SBI's telegraphic transfer buying rate on a specified date); which date applies to each leg is worth confirming with a CA the first time you sell. Sell-to-cover sales at vesting create small short-term gains or losses too, and they belong in the return. ## Dividends and foreign tax credit Dividends on US shares are taxed in India at your slab rate. The US withholds tax first: 25% under the India-US tax treaty if you have filed a W-8BEN with the broker, 30% if not. India gives you a **foreign tax credit** for the US tax, up to the Indian tax on the same income. Example: INR 50,000 of dividends, INR 12,500 withheld in the US. At 30% plus cess, Indian tax is INR 15,600, so you pay the remaining **INR 3,100** in India. To claim the credit, file **Form 67** on the income-tax portal (or the successor form under the new rules) with your return, and report the income in Schedules FSI and TR. ## Schedule FA: reporting the shares themselves If you're resident and ordinarily resident, you must report foreign assets held **at any time** during the reporting period in **Schedule FA** of your return, even if you sold nothing and earned nothing. For RSUs that means the foreign brokerage account, the shares in it and any cash balance. For countries with a calendar year, the period is generally the calendar year ending in the tax year, so 1 January to 31 December 2026 for FY 2026-27. - Report the account, the shares with their initial value, peak value and closing value during the period, and any income from them, converted to rupees. - Schedule FA means you can't use ITR-1; most salaried people with RSUs file ITR-2. - Leaving foreign assets out can attract a penalty of INR 10 lakh under the Black Money Act. A 2024 change spares small holdings of movable assets (below INR 20 lakh in aggregate) from that penalty, but it is a waiver, not permission to skip the schedule. - Returning NRIs who are not ordinarily resident (RNOR) don't need Schedule FA; it starts once you become ordinarily resident. - Unvested units aren't shares you own. Some CAs disclose outstanding grants anyway, conservatively; ask yours. ## Moving countries with unvested RSUs If you earned part of a grant while working abroad and it vests after you move to India (or the reverse), both countries may claim tax on the same vest, typically split by workdays in each country. The tax treaty and foreign tax credit are meant to stop double taxation, but the arithmetic is case-specific. This is worth a CA's fee; see [Kosh vs a CA](/compare/kosh-vs-chartered-accountant). ## A yearly RSU checklist 1. **At each vest,** save the broker's confirmation with the date, shares and value, and check the payslip TDS. 2. **Before 31 March,** see whether vests have pushed you past INR 50 lakh or INR 1 crore of income, and whether advance tax is due on any sales. 3. **In June,** download the broker's year-end statements for the calendar year for Schedule FA, plus dividend and US tax withheld. 4. **At filing,** use ITR-2: salary from Form 16, capital gains by lot, Schedule FA, Schedules FSI and TR, and file Form 67 for the credit. 5. **Every year,** check how much of your net worth sits in your employer's stock. Selling regularly after vesting is the simplest way to stop it growing by default. [Free tool**ESOP tax calculator**ESOPs are taxed twice: once when you exercise, as salary, and again when you sell, as capital gains. See both.](/tools/esop-tax-calculator)[Free tool**Surcharge calculator**For incomes above INR 50 lakh: see your surcharge band, how much marginal relief saves you at the threshold, and your total tax with cess.](/tools/surcharge-calculator)[Free tool**Capital gains tax calculator**Pick the asset, enter the purchase and sale dates and prices, and Kosh tells you whether the gain is short-term or long-term and works out the tax under the FY 2026-27 rules.](/tools/capital-gains-tax-calculator)[Free tool**Dividend tax calculator**Dividends are taxed in your hands at your slab rate. Enter your dividends and salary to see the real tax, the TDS companies deduct, and what you still need to pay.](/tools/dividend-tax-calculator) **Where Kosh fits** Kosh shows what each vest does to your tax and surcharge, reminds you before advance-tax dates after a sale, and keeps employer stock in view as a share of your net worth. It doesn't prepare Schedule FA or file returns. ## Frequently asked questions How are RSUs taxed in India? At vesting, the fair market value of the shares is a perquisite taxed as salary at your slab rate, with TDS by your employer. When you sell, the difference between the sale value and the vest-date value is a capital gain. What is the capital gains tax on US RSUs in India? Shares listed only abroad are treated like unlisted shares. Held for more than 24 months, the gain is taxed at 12.5% without indexation and without the INR 1.25 lakh exemption. Held for 24 months or less, it is added to your income at slab rates. Do I need to report RSUs in Schedule FA? Yes, if you are resident and ordinarily resident and hold shares or a brokerage account abroad at any time in the reporting period, generally the calendar year. Report it even if you sold nothing. This means filing ITR-2 rather than ITR-1. Can I claim credit for US tax withheld on dividends? Yes. Dividends are taxed in India at your slab rate, and the US tax withheld, usually 25% under the treaty, is credited up to the Indian tax on that income. File Form 67 with your return and report the income in Schedules FSI and TR. Is there a penalty for not disclosing foreign RSUs? Non-disclosure of foreign assets can attract a INR 10 lakh penalty under the Black Money Act. Since 2024, movable foreign assets below INR 20 lakh in aggregate are spared from that penalty, but you should still disclose them. ## Sources - [Income Tax Department](https://www.incometax.gov.in/) - [Income Tax Department: tax treaties](https://incometaxindia.gov.in/) Written by the Kosh team and checked against the rules in force on 30 October 2026. This guide is general information, not tax, legal or investment advice. Kosh is an educational financial planning tool by Primedepth Labs. It is not a SEBI-registered investment adviser and does not offer personalised investment advice, hold your money or execute trades. Markets carry risk; read scheme documents carefully and consult a registered adviser before acting. ## Upload your statement and Kosh does this for you. Kosh reads your bank and card statements, works out your tax under both regimes and turns guides like this one into your own numbers and next steps. [Start free](/signup?via=learn-rsu-taxation-india)