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RSU, ESOP & Foreign Stock Taxation in India for Resident Employees

Everything your return needs is already in your broker statement — it just has to be mapped. The vesting report gives the perquisite value and your cost basis. The dividend statement gives the Form 67 credit. The gain-loss report drives capital gains. The holdings summary gives the peak and year-end values Schedule FA asks for.

Two things catch almost everyone: your broker reports on a calendar year and Schedule FA runs on a different period, and Schedule FA applies even in a year you sold nothing. Both are set out below, along with what to send if you would rather it were handled.

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Before you write in

  • Buying Property in Dubai as a Resident Indian: LRS, TCS and Tax

    A resident Indian can buy property in Dubai, but only with money sent under the Liberalised Remittance Scheme, within USD 250,000 per person per year, and with 20% TCS on most of it. The purchase also starts a reporting duty in every return for as long as you hold the flat, and leaving it out is the most expensive omission on the form.

  • FAST-DS 2026: Window Open Until 31 December

    The window opened on 16 August 2026 and closes on 31 December. Foreign assets you never reported settle at 60% of value against the 120% the Black Money Act charges — or a flat ₹1 lakh on narrower facts.

  • Dubai Off-Plan Payment Plans: LRS Limits and No Foreign Mortgage

    An off-plan payment plan is set in dirhams and percentages; the Indian limits that apply to it are set in dollars per person per financial year. Mapping one onto the other before signing shows whether the plan fits, what TCS each instalment carries, and what happens if a buyer moves abroad or the purchase is cancelled.

Reading your broker statement — E*TRADE, Morgan Stanley, Fidelity, Schwab

The figures Schedule FA and the capital-gains schedule need are all in your equity-platform statements — they just need mapping. From a typical statement (illustrative, not from any client file):

  • Vesting / release report → the per-vest FMV and share count that support the salary perquisite and your cost basis.
  • Dividend statement → gross dividend and foreign tax withheld (also shown on Form 1042-S, the US statement of income paid to a foreign person and tax withheld) — this feeds the Form 67 credit.
  • Trade / gain-loss report → sale date, proceeds and cost, which drive the capital-gains computation after currency conversion.
  • Account & holdings summary → peak and year-end value and the account details for Schedule FA.

The full field-by-field mapping, including the calendar-year versus financial-year trap that catches most filers, is in Schedule FA from your broker statement, line by line.

Schedule FA — the disclosure you cannot skip

As a resident (and ordinarily resident) holding foreign assets, you must disclose them in Schedule FA of your return — the foreign equity/RSU holdings, the brokerage account, and any bank accounts — even where there is no income or sale. This disclosure is independent of the tax computation, and it is the single most common thing generic filing gets wrong for MNC employees.

One point that trips people up: Schedule FA is reported for the relevant accounting period — for many countries, the calendar year — not the Indian financial year, so the figures come from a different window than the rest of your return.

The three taxable events, handled correctly

  1. When shares vest (or an option is exercised) — the fair market value on the vesting/exercise date is a perquisite taxed as salary in that year, and usually already appears in your Form 16 (Form 130 from FY 2026-27). What matters is confirming it was captured at the right value and that TDS on it was accounted for. This value also becomes your cost of acquisition for the eventual sale.
  2. Foreign dividends — dividends on your foreign shares are taxable in India in your hands, at your slab rate. Where the foreign country has already withheld tax — on US shares, dividends are commonly withheld at 25% under the India-US tax treaty — relief is claimed under the applicable DTAA through Form 67 as a foreign tax credit, so you are not taxed twice.
  3. Capital gains on sale — when you sell, the gain (sale value minus the vesting-date cost) is taxable in India. Foreign shares are treated as unlisted, so a holding of more than 24 months is long-term, taxed at 12.5% without indexation; a holding of 24 months or less is short-term, taxed at your slab rate. Cost and sale value are each converted to rupees using the prescribed exchange rate (the SBI TT buying rate on the relevant date, under Rule 115).

Form 67 & DTAA credit on dividends

Foreign tax credit for the tax withheld abroad is not automatic — it is claimed by filing Form 67 online, on or before the end of the assessment year, under the foreign-tax-credit rules (Rule 128). It reconciles the foreign income and the foreign tax (from Form 1042-S / the broker’s dividend statement) against the DTAA, so the credit reduces your Indian tax on the same income. Missing Form 67 is a common reason employees end up effectively double-taxed. The deadline, what to attach and what voids the claim are covered in Form 67 and foreign tax credit on US dividends.

Which ITR form

Holding foreign assets or earning foreign income means ITR-2 — or ITR-3 if you also have business income (for example, F&O trading). ITR-1 cannot be used once Schedule FA applies; filing ITR-1 in this situation is itself a defect.

Received the email about “overseas financial interests”?

Since late September 2026 the department has been emailing taxpayers whose foreign bank and brokerage data has reached India under the automatic exchange of information, pointing them to the Foreign Assets Information in their AIS and to the FAST-DS disclosure window, which closes on 31 December 2026. It is not a notice and does not itself need a reply. Whether you need to do anything depends on what was already reported, in which years — see what the email means and what to do and reading the Foreign Assets Information in your AIS.

Property abroad — Dubai and elsewhere

A flat in Dubai bought by a resident is reported, taxed and funded under the same rules as foreign shares: the USD 250,000 LRS limit, 20% TCS above ₹10 lakh, Schedule FA every year, and Indian tax on the rent and on the gain. The full route is in buying property in Dubai as a resident Indian, and what the “tax-free” label does and does not save is in is Dubai property tax-free for Indians?. We advise on the tax and FEMA side only; we do not broker property or take commissions.

Non-disclosure exposure — stated plainly

If you have already filed without the disclosure, the position is usually still recoverable — the revised-return window and what it covers are set out in missed Schedule FA? the revised return window explained.

Foreign assets and income are governed not just by the Income-tax Act but by the Black Money (Undisclosed Foreign Income and Assets) Act. Non-disclosure of a foreign asset can attract a penalty of ₹10 lakh per year of default and possible prosecution, separate from any tax. (Foreign assets other than immovable property with an aggregate value not exceeding ₹20 lakh are now outside this penalty/prosecution exposure — but disclosure remains the correct course.) This is why Schedule FA is completed carefully and completely, even for a single vested RSU lot.

Resident vs NRI — which page applies to you

This page is for residents. Schedule FA and worldwide taxation apply to residents; in the first years after you return to India, RNOR status can keep foreign income outside Indian tax for a limited window. If you are a non-resident or NRI, the treatment is different — only India-sourced income is taxed and Schedule FA does not apply the same way; see our NRI Taxation page.

What to send

Your Form 16 (Form 130 from FY 2026-27), your broker/equity-platform statements (vesting, dividend and sale reports — E*TRADE, Morgan Stanley, Fidelity, etc.), your Form 1042-S if issued, and details of foreign tax withheld. The foreign-income computation, Form 67 and Schedule FA are prepared from these for your review before filing.

Frequently asked questions

I got an email from the Income Tax Department about overseas financial interests. Is it a notice?

No. It is an information message sent to taxpayers whose foreign bank or broker data has been received by India under automatic exchange of information, asking them to review the Foreign Assets Information in their AIS and pointing to the FAST-DS disclosure scheme, open until 31 December 2026. It cites no section and needs no reply as such. What matters is whether those assets and the income from them were reported in your returns — if they were, there may be nothing to do; if not, the route depends on the year.

I haven't sold my RSUs, only received them — do I still report anything?

Yes. The vesting perquisite is taxed as salary in the year of vesting, and the holding must be disclosed in Schedule FA of your return even when there is no sale.

Tax was already deducted abroad on my dividends — am I taxed again in India?

The income is taxable in India, but relief under the applicable Double Taxation Avoidance Agreement, claimed through Form 67, gives credit for the foreign tax withheld — so you are not taxed twice.

What happens if I don't disclose foreign shares in Schedule FA?

Non-disclosure of foreign assets is treated seriously under the Black Money (Undisclosed Foreign Income and Assets) Act — a penalty of ₹10 lakh per year and possible prosecution, independent of the income tax itself. (Foreign assets other than immovable property with an aggregate value not exceeding ₹20 lakh are now outside this exposure, but disclosure is still the correct course.)

Which ITR form applies to me?

Holding foreign assets or foreign income requires ITR-2 (or ITR-3 if you also have business income, such as F&O trading); ITR-1 cannot be used.

My RSUs vested but I sold nothing — is there any tax to pay now?

Yes, at vesting. The fair market value of the shares on the vesting date is a perquisite taxed as salary that year, and it usually already appears in your Form 16 (Form 130 from FY 2026-27). Tax on any gain arises separately, later, only when you actually sell.

How is the gain calculated when I sell US shares?

The cost (the vesting-date value already taxed as perquisite) and the sale value are each converted to rupees using the prescribed exchange rate, and the gain is the difference. Foreign shares are treated as unlisted, so a holding of more than 24 months is long-term (taxed at 12.5% without indexation); 24 months or less is short-term and taxed at your slab rate.

Do I need to report a US brokerage account even if it only holds vested RSUs?

Yes. The account and the shares held in it are foreign assets and must be reported in Schedule FA, regardless of whether you traded or earned anything during the year.

Is ESPP taxed differently from RSUs?

The framework is the same — a perquisite element (the discount) is taxed as salary, and capital gains arise on sale — but the perquisite is measured differently for ESPP than for RSUs. Both must be disclosed in Schedule FA.

Foreign RSUs or ESOPs to report this year?

Send your Form 16 and broker statements. The foreign-income computation, Form 67 credit and Schedule FA disclosure are prepared for your review — before anything is filed.

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