# How RSUs are taxed in India

Tax · 3 min read · Updated 5 October 2026

You get taxed twice: once as salary on the day your RSUs vest (even if you keep every share), and again as capital gains when you sell. The vest-day tax is usually paid by selling some shares on the spot.

> **Heads up.** Tax rules change. Confirm the details with a chartered accountant before you act.

## The short version

RSU income gets taxed twice. First, the value of the shares on vest day is taxed as salary. Later, when you sell, the growth since vesting is taxed as capital gains. This guide is for people who are tax residents of India.

## Stage 1: vest day, when the tax bill shows up

-   The **perquisite** is the market value of the shares on the vest date, times the number of units, converted to rupees. It is taxed as salary (Section 17(2)(vi) of the Income-tax Act, 1961, which is renumbered under the Income-tax Act, 2025).
-   Your employer deducts TDS on it under Section 192. Most US employers do this through sell-to-cover.
-   You’re taxed at vesting even if you keep every share.
-   The taxable value is fixed on the vest date. If the share price drops afterwards, your tax doesn’t drop with it.

## Which exchange rate?

Foreign values are converted to rupees using the SBI telegraphic transfer buying rate (TTBR). Published guides disagree on which date’s rate applies at vesting: the vesting date itself, or the last day of the previous month. Check with your payroll team or CA.

## A worked example

This is an illustration, not a forecast.

| Step | Figure |
| --- | --- |
| Units vesting | 100 |
| Share price on vest date | $150 |
| USD/INR rate | ₹97 |
| Value of one share | ₹14,550 |
| On paper (perquisite value) | ₹14,55,000 |
| Tax at 31.2% (30% slab plus 4% cess) | ₹4,53,960 |
| Shares sold to cover (rounded up) | 32 |
| Shares you keep | 68 |

The cost basis of each share is its value on the vest date, ₹14,550 here. Plug in your own numbers with the [sell-to-cover calculator](https://rsu-hub.vercel.app/tools/sell-to-cover-calculator/).

## Stage 2: when you sell

-   Your gain is the sale proceeds, converted to rupees, minus the vest-date value of those shares.
-   Shares of US-listed companies aren’t listed in India, so guides treat them as unlisted securities. That means the holding period counts from the vest date, with a 24-month threshold.
-   Guides report that gains on shares held for more than 24 months are taxed at 12.5% without indexation, and shorter holds are taxed at your slab rate.
-   The tax you paid at vesting can’t be set off against capital gains tax. They’re separate events.

See where a sale falls with the [holding period checker](https://rsu-hub.vercel.app/tools/holding-period-checker/).

## Mistakes people make

-   Selling between 12 and 23 months after vesting and expecting the lower long-term rate.
-   Forgetting to report the shares in Schedule FA. Here’s the [Schedule FA guide](https://rsu-hub.vercel.app/guides/schedule-fa-for-rsu-holders/).
-   Treating TDS as the final tax and missing a shortfall.

## Try the maths

### [Sell-to-cover calculator](https://rsu-hub.vercel.app/tools/sell-to-cover-calculator/)

How many shares vanish to TDS on vest day?

### [Holding period checker](https://rsu-hub.vercel.app/tools/holding-period-checker/)

Short-term or long-term? And when does it flip?

### [Tax calendar](https://rsu-hub.vercel.app/tools/tax-calendar/)

The dates that matter, with a countdown.

## Quick answers

**Do I owe tax if I don't sell my RSU shares?**

Yes. The value of the shares on the vesting date is taxed as salary even if you keep every share.

**Is the TDS my final tax?**

No. TDS is deducted on an estimate. Depending on your income you may owe more when you file, and some of it can be due earlier as advance tax.

**Do I pay tax in the US as well?**

If any US tax was withheld, you generally pay in India and claim a credit for the foreign tax under the India-US treaty, using Form 67. Your CA can confirm how this applies to you.

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Source: https://rsu-hub.vercel.app/guides/how-rsus-are-taxed-in-india/