# RSU Taxation for Employees in India

> RSUs are taxed as a salary perquisite when they vest, on the fair market value of the shares on the vesting date, and your employer deducts TDS — often by selling some shares ('sell to cover'). When you later sell, the gain over that vesting value is capital gains: for shares of a foreign company, long-term after 24 months at 12.5%, otherwise at slab rates. While you are resident, every foreign RSU holding goes in Schedule FA.

Practice: Salary, RSU & ESOP Tax — https://www.industax.com/services/employee-tax/

The common errors are double taxation (paying capital gains on the full sale value instead of the gain over vesting FMV), missing Schedule FA, and wrong exchange rates. The perquisite value and cost must use the SBI telegraphic transfer buying rate under the prescribed rules.

For employees who worked part of the vesting period abroad, the perquisite may be partly taxable in another country; we apportion it and claim foreign tax credit with Form 67.

## Key facts

| Item | Detail |
| --- | --- |
| At vesting | Perquisite = FMV on vesting date; TDS by employer |
| Cost for capital gains | FMV taken for the perquisite |
| Foreign shares LTCG | After 24 months, 12.5% |
| Disclosure | Schedule FA (calendar year) while resident |
| Exchange rate | SBI TT buying rate as prescribed |

## Who needs this

- Employees of MNCs and listed tech companies
- Returning NRIs with vested RSUs
- Employees who used sell-to-cover

## What's included

- Vesting and sale reconciliation
- Capital gains in INR
- Schedule FA
- Foreign tax credit where applicable

## Documents

- Brokerage (e.g. stock plan) statements
- Form 16 showing perquisite
- Sale confirmations

## Process

1. **Reconcile** — Vests, sales and TDS matched.
2. **Compute** — Gains and FA values in INR.
3. **File** — ITR with Schedule FA and FTC.

## FAQs

### Is RSU income already taxed in my Form 16?

Yes, the perquisite at vesting is included in your salary and Form 16. Only the later capital gain on sale needs separate reporting in your ITR.

### What if I'm still holding vested RSUs?

No capital gains arise until you sell, but the holding must be reported in Schedule FA every year while you are resident and ordinarily resident.

### Are dividends on RSU shares taxable in India?

Yes, at slab rates, with credit for foreign withholding tax (claimed through Form 67).

## Official sources

- incometaxindia.gov.in: https://www.incometaxindia.gov.in/
- Income Tax e-Filing portal: https://www.incometax.gov.in/

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This is general information, not advice for your specific facts.