RSUs in one minute
A restricted stock unit (RSU) is your employer’s promise to hand you company shares once you’ve stuck around long enough. You don’t pay for them. If you work in India for a US-listed company, the shares are usually the foreign parent’s, parked in a US brokerage account in your name.
The three dates that matter
| Date | What happens |
|---|---|
| Grant date | The company promises you a number of units. Nothing is yours yet. |
| Vest date | The units turn into shares you own. This is when Indian tax first applies. |
| Settlement date | The shares land in your broker account, which can be a few days after vesting. |
Vesting schedules you’ll run into
- Equal yearly: say 25% of the grant each year over four years.
- Quarterly or monthly: smaller chunks more often, usually after an initial wait.
- Back-loaded: more of the grant vests in the later years. Amazon grants have historically been reported as 5%, 15%, 40% and 40% over four years, though the exact schedule varies by grant.
Your grant documents are the final word. You can map out your own dates with the vest calendar.
Sell-to-cover: where some of your shares go
When RSUs vest, your India payroll has to deduct tax on their value. With sell-to-cover, your employer sells just enough of the new shares to pay that tax and gives you the rest.
Here’s the picture. If 100 units vest at $150 with the dollar at ₹97 and your tax rate is 31.2%, roughly 32 shares are sold and you keep 68. These numbers are only an example. Try your own in the sell-to-cover calculator.
Selling, holding and blackout windows
Once shares have vested you can usually sell them or hold on. Companies often block trading at certain times, for example around earnings announcements. Those are called blackout windows, so check your plan’s calendar before you plan a sale.
If you leave (or get laid off)
Typically, RSUs that haven’t vested are forfeited when you leave, and vested shares stay yours. Check your plan documents for the exact terms. Even after you leave, any shares you still hold need to be reported in your Indian tax return.