# NRI RSU & ESOP Taxation

> When an employee moves between India and another country during the grant-to-vest period, RSU and ESOP income is typically split by the days worked in each country: the part linked to work in India is taxable in India even if you are an NRI when the shares vest. The other country may tax the same income, so treaty relief and foreign tax credit decide what you finally pay. Selling the shares later creates capital gains taxed according to your status at the time.

Practice: NRI Tax Services — https://www.industax.com/services/nri-tax/

Employers often withhold tax in only one country, leaving the employee to sort out the double taxation. We build a day-by-day apportionment, check the employer's withholding in both countries and claim credit for tax paid abroad.

For shares of foreign companies held while you are resident in India, Schedule FA reporting applies; for Indian company ESOPs held after you become an NRI, Indian tax applies on sale.

## Key facts

| Item | Detail |
| --- | --- |
| Perquisite timing | Generally at vesting (RSU) / exercise (ESOP) |
| Cross-border split | By days worked in each country during the service period |
| Double taxation | Relieved through DTAA and foreign tax credit |
| Sale | Capital gains per residential status at sale |

## Who needs this

- Employees who moved abroad with unvested RSUs
- NRIs returning to India with equity awards
- Employees with stock from both Indian and foreign employers

## What's included

- Day-count apportionment
- Withholding review in both countries
- Foreign tax credit claim
- Schedule FA and capital gains reporting

## Documents

- Grant and vesting statements
- Payslips / Form 16 and foreign tax forms
- Travel and work-location history

## Process

1. **Map** — Grants, vests and work locations charted.
2. **Apportion** — Income split by country.
3. **File** — Returns filed with credit claims.

## FAQs

### My RSUs vested after I left India. Are they taxed in India?

The portion relating to work you did in India during the vesting period can be taxed in India even if you were an NRI when they vested.

### How do I avoid being taxed twice on RSUs?

Through the tax treaty and foreign tax credit — the country of residence usually gives credit for tax paid in the source country.

### Are RSUs of an Indian startup taxed if I sell them after becoming an NRI?

Yes. Gains on shares of an Indian company are taxable in India on sale, subject to the tax treaty with your country of residence.

## Official sources

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

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Publisher: Indus Tax — CA-led tax and compliance firm (https://www.industax.com). Contact: info@industax.com, 9059139258.
This is general information, not advice for your specific facts.