Answers to the most common questions about RSU taxation in India. If your question is not here, ask us on WhatsApp.
RSU income is taxed in two stages. At vesting, the Fair Market Value of the shares is perquisite income under Section 17(2) — taxed as salary, with TDS deducted by the employer. On a subsequent sale, the difference between sale price and FMV at vesting (cost of acquisition) is taxed as capital gains. LTCG (24+ months from vest date) at 12.5% under Section 112A. STCG at applicable slab rate.
The SBI TT Buy rate on the last working day of the month immediately preceding the transaction month — per Rule 115 of the Income Tax Rules 1962. For a March vest, use the February month-end rate. Not the transaction date rate. Not an average. The preceding month-end.
A flat penalty of Rs. 10 lakh per undisclosed foreign asset under Section 41 of the Black Money Act 2015 — regardless of the asset's value or whether any income arose. Prosecution under Section 42 is also possible for wilful non-disclosure, carrying imprisonment of 3 to 10 years.
Calendar year — January 1 to December 31. When filing ITR for FY 2024-25, Schedule FA covers calendar year 2024. This is different from the Indian financial year (April to March).
From the vest date. RSUs are not property until they vest. Holding period for LTCG classification starts from the vesting date. Using the grant date is one of the most common errors in RSU tax filing in India.
Form 67 is required to claim Foreign Tax Credit under Section 90 for taxes withheld on RSU dividends abroad (typically 25% under India-US DTAA). It must be filed before the ITR — not simultaneously. Required fields: dividend income in INR, foreign tax paid in INR, applicable DTAA article.
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