RSUs and foreign shares: how they're taxed in India

When they vest: taxed as salary

On the vesting date, the market value of the shares (minus anything you paid) is a perquisite: part of your salary. Your employer adds it to your salary and deducts TDS, often by withholding some of the shares. It appears in your Form 16.

When you sell: capital gains

Your cost is the value on the vesting date, already taxed as salary, converted to rupees. Shares of a foreign company aren't listed on an Indian stock exchange, so:

The ₹1.25 lakh yearly exemption for listed Indian equity doesn't apply to foreign shares.

Schedule FA: reporting foreign assets

If you're resident and ordinarily resident in India, you must list foreign shares, including RSUs that have vested, and foreign bank or brokerage accounts in Schedule FA of your return, even if you haven't sold anything. Whether you're resident and ordinarily resident depends on the day-count tests in the tax law, so check your status first. This means using ITR-2 (or ITR-3), not ITR-1. Leaving them out can lead to penalties under the black money law, so it's worth getting right.

Dividends and US tax

Dividends on foreign shares are taxed in India at your slab rate. If tax was withheld abroad, you may be able to claim a credit for it by filing Form 67 on the e-filing portal. File it with your return to be safe.