If you hold RSUs from a US-listed employer like Google or Amazon and you're comparing notes with a friend whose RSUs come from an Indian-listed company like Zomato or Swiggy: no, your tax treatment is not the same, even though both of you technically hold 'RSUs.'
The salary-tax part at vesting works identically for both of you. Everything downstream of that, the capital gains rate, the holding period you need for long-term treatment, whether you owe Schedule FA disclosure, and even which ITR form you file, differs because the Income Tax Act treats US-listed shares and Indian-listed shares as fundamentally different categories of asset.
This post walks through exactly where the two diverge, corrects two mistakes that show up often in RSU tax explainers (an incorrect flat 20% short-term rate for foreign shares, and applying the domestic ₹1.25 lakh exemption to foreign shares), and closes with a worked example comparing both scenarios rupee for rupee.
Table of contents
- The core distinction: which section of the Act applies
- Holding period: 24 months vs. 12 months
- Tax rates: correcting two common mistakes
- Schedule FA, currency conversion, STT, and ITR form
The core distinction: which section of the Act applies
At vesting, both types of RSUs are taxed the same way: the fair market value (FMV) of the shares on the vesting date is treated as a perquisite under Section 17(2)(vi) and taxed as salary income at your slab rate, with your employer deducting TDS under Section 192.
The split happens at the capital gains stage, when you eventually sell the shares.
- US-listed RSUs (Google, Amazon, and similar) are shares of a foreign company. For Indian tax purposes, foreign shares, including RSUs of overseas companies, are treated as unlisted equity shares/securities, because they aren't listed on an Indian stock exchange. That means they fall under Section 112 of the Income Tax Act, the general capital gains provision, not the special STT-linked provisions.
- Indian-listed RSUs (Zomato, Swiggy, and similar) are shares of a company listed on an Indian stock exchange. When you sell them, your broker deducts Securities Transaction Tax (STT) on the trade automatically. Because STT is paid, these shares qualify for the special STT-linked provisions: Section 111A for short-term gains and Section 112A for long-term gains.
This Section 112 vs. Section 112A split is the single biggest source of confusion in RSU tax explainers, and it's worth being precise about, because it changes both your holding-period math and your final tax bill.
Holding period: 24 months vs. 12 months
Because US-listed RSUs are classified as unlisted equity securities, they follow the unlisted-shares holding period rule: the holding period is counted from the vesting date to the sale date, and shares held for 24 months or less are short-term, while shares held for more than 24 months are long-term.
Indian-listed RSUs, being STT-paid listed equity, follow the shorter listed-equity holding period: shares held for 12 months or less are short-term, and shares held for more than 12 months are long-term.
This means the exact same holding period, say 18 months, can be short-term for one colleague and long-term for another, purely based on where the employer is listed.
Tax rates: correcting two common mistakes
Mistake 1: 'STCG on US-listed shares is a flat 20%.' This is incorrect. The 20% short-term rate applies specifically to STT-paid listed equity under Section 111A, which US-listed shares are not (there's no STT on a US exchange trade). Short-term capital gains on foreign shares like US-listed RSUs, held 24 months or less, are added to your income and taxed at your income tax slab rate, which could be anywhere from 0% to 30% depending on your total income, not a flat 20%.
Mistake 2: 'The ₹1.25 lakh LTCG exemption applies to US-listed shares too.' Also incorrect. The ₹1.25 lakh annual exemption is a Section 112A feature, built specifically for domestic STT-paid listed equity. It does not extend to foreign stocks. Long-term capital gains on US-listed RSUs, held more than 24 months, are taxed at a flat 12.5%, without indexation, on the entire gain, from rupee one.
Here's the full rate table for each bucket:
| Bucket | Governing section | Short-term rate | Long-term rate | ₹1.25L exemption |
|---|---|---|---|---|
| US-listed RSUs (foreign, unlisted-in-India) | Section 112 | Slab rate (≤ 24 months) | 12.5%, no indexation (\\\> 24 months) | Does not apply |
| Indian-listed RSUs (domestic, STT-paid) | Sections 111A / 112A | 20% flat (≤ 12 months) | 12.5% (\\\> 12 months) | Applies, on gains above ₹1.25 lakh/year |
Both rates carry the standard surcharge (capped at 15% on long-term gains, regardless of your total income) and a 4% health and education cess on top of tax plus surcharge.
For both categories, your cost of acquisition is not the discounted or grant price, it's the FMV on the vesting date, the same figure already taxed as salary. Section 49(2AA) fixes this: the cost of acquisition for shares already taxed as a perquisite under Section 17(2)(vi) is the fair market value used for that perquisite, the same INR figure already reported in your Form 16. This applies identically whether the employer is US-listed or Indian-listed.
Schedule FA, currency conversion, STT, and ITR form
Schedule FA. Only foreign holdings trigger this. If you're a Resident and Ordinarily Resident (ROR) and hold vested US-listed RSUs at any point in a calendar year, even for a single day, you must disclose them in Schedule FA of your ITR, under Table A3 (Foreign Equity and Debt Interest), every year you hold them, whether or not you sell. Schedule FA follows the calendar year (1 January to 31 December), not the Indian financial year used for the rest of the return. Indian-listed RSUs are domestic assets and are never reported in Schedule FA.
Currency conversion. US-listed RSU values must be converted from USD to INR using the SBI TT Buying Rate (TTBR), and the rules here are more layered than one flat rule:
- The salary perquisite at vesting generally uses the TTBR on the vesting date itself, since RSU vesting almost always triggers immediate TDS withholding.
- The cost of acquisition for capital gains purposes is not re-converted at sale time. Under Section 49(2AA), it stays fixed at the INR figure already used for the perquisite (the vesting-date rate above), already reported in your Form 16.
- The sale value uses the TTBR as of the last day of the month preceding the month of sale.
- Schedule FA's Initial Value uses that same vesting-date TTBR, so it lines up with the perquisite figure. Peak Value and Closing Value use their own event dates instead: the peak-value date's TTBR for peak value, and 31 December's TTBR for closing value.
Indian-listed RSUs need none of this. Vesting FMV and sale price are already in INR, so there's no currency conversion step and no TTBR dependency at any stage.
STT. Indian-listed RSU sales carry Securities Transaction Tax, deducted automatically by your broker on the trade, which is precisely what qualifies these gains for the 111A/112A rates and the ₹1.25 lakh exemption. US-listed RSU sales carry no STT (Indian STT doesn't apply to a foreign exchange trade), which is precisely why they don't get those rates or that exemption, and fall back to the general Section 112 regime instead.
ITR form. A salaried employee with foreign assets such as US-listed RSUs must file ITR-2; ITR-1 and ITR-4 are not available if you hold any foreign asset or foreign income, regardless of amount.
If your only capital gains are Indian-listed RSUs, you have slightly more room: ITR-1 (Sahaj) can be used if your total income for the year is under ₹50 lakh, your long-term capital gains under Section 112A don't exceed ₹1.25 lakh, and you have no capital losses to carry forward or set off. But ITR-1 still does not accept short-term gains under Section 111A, so if you sell Indian-listed RSUs within 12 months, your total income exceeds ₹50 lakh, or your Section 112A gains exceed ₹1.25 lakh, you're back to ITR-2, same as your US-listed colleague.
LRS and repatriation. This only concerns the US-listed side. Bringing RSU sale proceeds back to India is not itself a taxable event, since the tax was already triggered at the point of sale, not at the point of transfer.
But if you're actively remitting fresh money abroad (unrelated to the RSU proceeds themselves) in the same financial year, remember the broader LRS/TCS rules apply: 20% TCS kicks in once your aggregate outward remittances for investment purposes cross ₹10 lakh in a financial year. Indian-listed RSUs involve none of this, since the shares, the trade, and the money never leave India.
Example. Suppose two engineers, both in the 30% tax bracket, each have a tranche of 100 RSU shares vest with the same rupee value.
Engineer A works at a US-listed company. Her 100 shares vest at an FMV of $150/share, with the SBI TTBR that day at ₹85/USD, giving a salary perquisite (and cost of acquisition) of ₹12,75,000, taxed at her slab rate with TDS under Section 192. She sells 26 months later at $200/share, with the TTBR that month at ₹88/USD, for a sale value of ₹17,60,000.
Engineer B works at an Indian-listed company. Her 100 shares vest at an FMV of ₹12,750/share (no currency conversion needed), also giving a salary perquisite and cost of acquisition of ₹12,75,000. She sells 14 months later at ₹17,000/share, for a sale value of ₹17,00,000, and her broker deducts STT on the trade.
| Item | Engineer A (US-listed) | Engineer B (Indian-listed) |
|---|---|---|
| Cost of acquisition | ₹12,75,000 | ₹12,75,000 |
| Holding period at sale | 26 months | 14 months |
| Sale value | ₹17,60,000 | ₹17,00,000 |
| Capital gain | ₹4,85,000 | ₹4,25,000 |
| Governing section | Section 112 | Section 112A |
| ₹1.25L exemption applied | No | Yes |
| Taxable LTCG | ₹4,85,000 | ₹3,00,000 |
| LTCG rate | 12.5% | 12.5% |
| Total LTCG tax (before surcharge/cess) | ₹60,625 | ₹37,500 |
The result: Engineer A and Engineer B earned almost the same rupee gain on their RSUs, but Engineer A pays about ₹23,000 more tax on it, purely because her shares are foreign. She also owes annual Schedule FA disclosure and had to track TTBR rates at multiple points; Engineer B owes neither.
