The two taxable events
| Event | What is taxed | Rate |
|---|---|---|
| Vesting | FMV of vested shares (perquisite, added to salary) | Your slab + 4% cess |
| Sale | Sale value − vesting FMV (capital gain) | STCG or LTCG, see below |
Capital gains rates (on or after 23 July 2024)
| Share type | Long-term after | LTCG rate | STCG rate |
|---|---|---|---|
| Listed on Indian exchange (STT paid) | 12 months | 12.5% over ₹1.25 L/yr | 20% |
| Foreign / unlisted shares | 24 months | 12.5% (no indexation) | Slab rate |
The ₹1.25 lakh annual LTCG exemption applies only to Indian-listed equity and equity mutual funds, not to foreign shares.
Cost of acquisition
Your cost basis for the capital gain is the vesting FMV in INR (converted at the TT buying rate on the vesting date), not the grant price, which is usually zero. This is why you are not taxed twice: the vesting value is already in your salary income.
Compliance for foreign RSUs
- Schedule FA: report all foreign shares held at any point in the calendar year, even unsold.
- Foreign Tax Credit: file Form 67 before your ITR to claim US withholding under the DTAA.
- Foreign Assets in ITR-2/3: RSUs make ITR-1 ineligible.
- Dividends: taxed in India at slab rates; US withholds 25% which is creditable.
Questions
How are RSUs taxed?
Perquisite on FMV at vest (slab rate), then capital gains on the appreciation when you sell.
Long-term holding period?
24 months for foreign shares, 12 months for Indian-listed shares, counted from the vesting date.
Taxed twice?
No — the vesting FMV becomes your cost basis, so only post-vest gains are taxed again.
Schedule FA?
Yes, foreign shares must be reported whether or not you sold them.