RSU and ESPP Tax Calculator
Perquisite at vest, capital gains at sale — and why foreign shares are taxed as unlisted here.
- Perquisite — (₹500.00 − ₹0.00) × 1000
- ₹5,00,000.00
- Cost basis for the sale — the FMV, not what you paid
- ₹5,00,000.00
- Capital gain — (₹800.00 − ₹500.00) × 1000
- ₹3,00,000.00
- Total tax
- ₹2,40,000.00
- Tax as salary
- ₹1,50,000.00
- Tax as capital gains
- ₹90,000.00
- You keep
- ₹5,60,000.00
FY 2026-27. There are two taxable events. At exercise for an ESOP, at vest for an RSU, or at purchase for an ESPP, the discount to fair market value is a salary perquisite taxed at your slab, with TDS deducted by your employer. At sale, the rise since that date is a capital gain. The holding period runs from allotment — not from grant, and not from the gap between vest and exercise. For an unlisted company the FMV must come from a SEBI Category-I merchant banker, dated no more than 180 days before the exercise; for a listed one it is the average of the opening and closing price on the exercise date. Foreign-listed shares are unlisted securities for Indian tax: 24 months to long-term rather than 12, no ₹1.25 lakh exemption, and short-term gains at your slab rather than the 20% that requires STT on an Indian exchange. Holders of foreign shares must also convert using the SBI TT buying rate — for the perquisite this is normally the vest date, which is what your Form 16 uses, and for the sale it is the last day of the month before the month of transfer. Foreign holdings must be disclosed in Schedule FA, which is reported on a calendar year (1 January to 31 December) rather than the financial year, with no minimum threshold — a very common filing error. Employees of a DPIIT-recognised startup holding a section 80-IAC certificate may defer the perquisite tax to the earliest of 48 months from the end of the assessment year of allotment, the sale of the shares, or leaving the company.
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How it works
Restricted stock units have no exercise price, so vesting is the taxable event: the full market value of the vested shares is a salary perquisite taxed at your slab rate. An employee share purchase plan works the same way, with the discount to fair market value on the purchase date taxed as the perquisite.
For Indian residents holding shares in a US or other foreign company, the second event is where it gets unfamiliar. Foreign-listed shares are unlisted securities for Indian tax: they need 24 months to turn long-term rather than 12, they get none of the ₹1.25 lakh exemption, and short-term gains are taxed at your slab rate rather than at the 20% that requires STT on an Indian exchange.
There are two compliance obligations that carry real penalties and are easy to miss. Foreign holdings must be disclosed in Schedule FA of your return, on a calendar-year basis, with no minimum threshold. And credit for US tax already withheld requires Form 67, filed by the end of the assessment year.
Perquisite = market value at vest (or the ESPP discount at purchase) x shares, at slab. Capital gain = (sale price - value at vest) x shares, long-term above 24 months for foreign shares at 12.5% with no exemption.Amounts in foreign currency convert at the SBI TT buying rate — the vest date for the perquisite, which is what your Form 16 uses, and the last day of the month before the month of transfer for the sale.
Frequently asked questions
How long must I hold US shares for long-term treatment in India?
Twenty-four months, not the twelve that applies to shares listed in India. Foreign-listed shares are treated as unlisted securities here regardless of how liquid the foreign exchange is. Below 24 months the gain is short-term and taxed at your slab rate, which for a 30% taxpayer is materially worse than the 20% that applies to Indian listed equity.
Do I have to declare my foreign shares even if I made no money?
Yes. Schedule FA disclosure is mandatory for anyone who is resident and ordinarily resident, with no de-minimis threshold — one share held for one day must be disclosed, whether or not it produced income, and whether or not your total income is below the exemption limit. The penalty under the Black Money Act is ₹10 lakh per year for non-disclosure, with a limited carve-out where aggregate foreign movable assets stay under ₹20 lakh.
Why is Schedule FA on a calendar year?
Because it is written that way, and it catches people out every year. For assessment year 2027-28 you report the calendar year 1 January to 31 December 2026, not the April-to-March financial year that governs the rest of your return. Positions opened in January and closed in February of the following year straddle two reporting periods.
Can I claim credit for US tax already withheld?
Yes, as a foreign tax credit under Rule 128 read with the India-US treaty, but it needs Form 67 filed on or before the end of the relevant assessment year, with the income reported in Schedule FSI and the credit claimed in Schedule TR. The credit is capped at the lower of the foreign tax paid and the Indian tax on that same income. Note that US dividend withholding for individual Indian shareholders is 25%, not the 15% that applies only to substantial corporate holdings.