Aarambha: Learn & InvestRSUs are company shares you get as part of your pay. When they become yours, their value counts as salary and is taxed; if you sell later, any rise is taxed again. See the tax at vest and on sale, how many shares cover it, and what to report if the shares are listed abroad.
Your numbers
One thousand five hundred rupees
The average of that day's opening and closing price, on the exchange with the most trading.
Forty lakh rupees
Gross salary without this vest.
Zero rupees
From your payslip or vest statement, to check it. Leave 0 to skip.
Tax on this vest
₹1,87,200
31.2% of the ₹6,00,000 that vested.
- You keep after tax
- ₹4,12,800
- Shares to sell to cover the tax
- 125 shares
- Total income tax for the year
- ₹9,75,000
Tax year 2026-27 (FY 2026-27, AY 2027-28) · Checked 5 November 2026 by Prashanth Sekhar
Estimates for education, not tax, legal or investment advice. Report a wrong number
Understand your result
RSUs are taxed twice. When they vest, their value that day is salary (section 17), taxed at your top slab rate, usually through payroll. When you sell, the rise since vesting is a capital gain, because the value taxed at vest becomes your cost (section 73).
Where the shares are listed changes the sale. Shares listed in India turn long-term after 12 months, with the first ₹1.25 lakh of long-term gains a year tax-free. Foreign shares need 24 months, have no tax-free amount, and short-term gains are taxed at your slab rate.
A common mistake
Leaving foreign shares out of Schedule FA. They have to be listed every year you hold them, even in a year you sold nothing.
How it's worked out
At vest: value = shares × price (× exchange rate), taxed as salary; extra tax = tax on salary + vest − tax on salary alone. On sale: gain = sale value − vest value, at 20% short-term or 12.5% long-term (above ₹1.25 lakh) for Indian-listed shares, or slab rate short-term and 12.5% long-term for foreign shares.
Assumptions
- Tax year 2026-27, residents below 60, slab-rate income only (no capital gains). Includes the standard deduction, the rebate with marginal relief, surcharge above ₹50 lakh and 4% cess. Rounded to ₹10.
- Long-term means held more than 12 months for shares listed in India, 24 months for foreign shares. A sale is assumed to be all the vested shares; surcharge on the gain and other gains in the year are left out.
- Staff of eligible startups can defer the tax at vest (section 289). Dividends are taxed separately as income.
Sources
- Income-tax Act, 2025, s.17: shares from your employer
- Income-tax Rules, 2026, r.15: value of the shares
- Income-tax Rules, 2026, r.206: exchange rate
- Income-tax Act, 2025, s.2(101): long-term or short-term
- Income-tax Rules, 2026, r.76: foreign tax credit (Form 44)
- Black Money Act, s.43: penalty for not reporting
- India–USA tax treaty
Updates
- 5 November 2026: Published. Rules checked against the Income-tax Act, 2025, the Finance Act, 2026 and the official October to December 2026 rates.
Questions people ask
What price is used for shares listed in India?
The average of the opening and closing price on the vest date, on the exchange with the most trading in the share (Rule 15). If it didn't trade that day, the closing price on the nearest earlier day.
What exchange rate applies to foreign shares?
The SBI telegraphic transfer buying rate on the last day of the month before the month the salary is due (Rule 206). On a sale, the same rate for the month before the sale month.
Why is the tax withheld different from this?
Withholding can use a different rate or round up the shares sold. Enter what was withheld to see the gap: an excess comes back as a refund when you file, and a shortfall is paid as self-assessment tax.
Do I need a tax residency certificate for US tax on dividends?
Not to claim the credit in India: a resident files Form 44 with proof of the US tax (Rule 76). The US treaty caps tax on dividends to an individual at 25%.