If you're an Indian-resident employee with RSUs vesting from a US company, and a vest date is coming up in the next few weeks, five things are worth checking before it lands:
- exactly when it happens and how many shares you're getting
- what your employer will withhold and how
- the paperwork you'll want on file, the exchange rate that governs the numbers
- and whether the new shares tip you further into one stock than you'd like.
Table of contents
- Confirm the exact vest date and share count
- Know what will happen to your tax and take-home pay on vest day
- Gather payroll and withholding documentation
- Keep your currency-conversion records
- Reassess how concentrated you are in one stock
Confirm the exact vest date and share count
You don't legally own RSU shares until the vest date, not the grant date. So the number that matters for tax is whatever the fair market value (FMV) is on that specific day.
Check your equity plan platform (Shareworks, E*Trade, Fidelity, or whatever your employer uses) for:
- The exact vest date for this tranche.
- The number of shares vesting (after any prior forfeitures are accounted for).
- Whether this is a normal scheduled vest or one accelerated/delayed around a blackout period, leave, or company event.
If you have multiple tranches from different grant years, each one vests and gets taxed separately.
RSUs typically vest over several months or years rather than all at once, and each vesting event creates its own lot that must be tracked independently for tax purposes. Lots from different vest dates cannot be combined into a single calculation later, since combining them produces the wrong capital gains and potentially the wrong tax treatment. If you have three tranches vesting this year, you need three separate records, not one blended average.
Know what will happen to your tax and take-home pay on vest day
This is the item people most often get wrong: they assume nothing tax-related happens until they sell. It does not work that way.
On the vesting date, the FMV of the vested shares is treated as a perquisite and forms part of your salary income for that year, whether you sell the shares immediately or hold them. Tax is payable on the value of vested RSUs in the year vesting happens, regardless of what you do with the shares afterward.
Your employer usually handles this automatically. They deduct Tax Deducted at Source (TDS) under Section 192 of the Income-tax Act at the time of vesting, either by selling a portion of the shares (sell-to-cover) or by deducting the amount from your regular salary.
Sell-to-cover, where the employer or broker automatically sells enough shares to cover the estimated tax and credits you with the remainder, is the most common method. Note that even shares sold to cover the tax are still treated as salary income at vesting, at their full FMV, not a reduced amount.
Gather payroll and withholding documentation
Set up a folder (digital or physical) before the vest, not after, so you're not reconstructing it at ITR filing time. For the salary side of RSU taxation, you'll need:
- Form 16, which shows the salary income and tax deducted at the time your RSUs vested.
- Vesting statements from your equity plan platform, showing the vest date, share count, and FMV.
- Payslips for the month of vesting, since the RSU perquisite typically flows through payroll.
- Form 26AS, which shows the taxes deducted or collected on your behalf, and the Annual Information Statement (AIS), which you should check to verify your reported income matches what the Income Tax Department has on record.
Form 16 alone is not enough. It's useful for salary reporting, but it doesn't contain everything you'll need later to calculate capital gains when you eventually sell, that requires brokerage statements, vesting records, and sale confirmations as well.
Keep your currency-conversion records
Every RSU value in your Indian tax filing has to be converted from USD (or whichever currency your employer prices shares in) to INR, and the rate used is called the SBI TT Buying Rate (TTBR).
For the RSU perquisite specifically, the applicable TTBR date is generally the vesting date itself, since RSU vesting almost always triggers immediate TDS withholding through sell-to-cover. SBI publishes TTBR for major currencies, including USD, every working day. If the relevant date falls on a Sunday or bank holiday when SBI doesn't publish a rate, use the rate from the last working day before it.
Before or right after your vest, save:
- The TTBR for the date your payroll actually used.
- The USD (or local currency) FMV per share your employer used.
- The resulting INR value, since this becomes both your salary income for this vest and your cost of acquisition when you eventually sell the shares.
Reassess how concentrated you are in one stock
This vest is adding more shares of your employer's stock to whatever you already hold, on top of the salary you already earn from the same company. That's the definition of concentration risk: your paycheck, your bonus, and now a growing chunk of your investments all depend on one company's fortunes.
Before the vest lands, it's worth asking:
- What percentage of your total investable net worth will this employer's stock represent after this vest?
- Do you already have a plan (a selling rule, a target allocation, a trigger price) for what happens to these new shares, or will they just sit in the account by default?
- If this is a refresher grant layered on top of earlier grants, has your concentration crept up gradually without you noticing?
There's no single, universally agreed numeric threshold for how much single-stock concentration is 'too much,' since it depends on your own risk tolerance and financial picture.
Example. Suppose you are a senior engineer with 400 shares vesting this quarter, on top of 900 shares you already hold from earlier grants and 200 ESPP shares. Before assuming this vest is 'just more of the same,' it's worth actually adding up the numbers rather than eyeballing them.
| Item | Shares | Approx. value (at current price) |
|---|---|---|
| Existing vested RSU holdings | 900 | To be filled in with current price |
| ESPP holdings | 200 | To be filled in with current price |
| New vest (this tranche) | 400 | To be filled in with current price |
| Total | 1,500 | Sum of the above |
The result: once you plug in your own numbers, you'll have an actual concentration percentage against your total investable net worth, rather than a guess, and that's the number that should drive whether you sell some, hold all of it, or set a rule for future vests.
