LTCG on Foreign RSU Stock sale

Sir,

If an employee sells his RSU units after 2 years of vesting completion, please update the LTCG rate.

Employer's stock listed in US, and allotted to an employee working in India. 

Grant-2015 ; Vesting period - 2016 to 2018 in parts; RSU units deducted as Tax in India, before allocation.

Sold in Nov'2024.  No Tax deducted in US for the sale.

In 2024-25 FY in ITR-2 return, 

  1. Will the LTCG tax on foreign listed RSU slae,  be  20% after indexation.
  2. Is no tax payable, if the acessor has only LTCG from above foreign listed RSU and the gain is < 1 Lakh
  3. (or) will this be treated a perquisite from the employer and to be added to salary with slab rate (say 30%). Note : the employee left the company years before the sale happened
  4. In form-67, apart from DTTA of foreign tax on dividend income, should we mention long term capital gain details of RSU sold, in Form-67. (or) only it should be mentioned in LTCG of ITR-2.

Thanks

Replies (3)
Quick Summary
This discussion clarifies the Long Term Capital Gains (LTCG) tax implications for employees selling foreign-listed Restricted Stock Units (RSUs) in India. It explains that RSUs are taxed as a perquisite upon vesting and as capital gains upon sale. The LTCG tax rate is generally 20% after indexation for sales before July 2024, and 12.5% without indexation for sales after July 2024, provided the holding period from vesting exceeds 24 months. Gains under ₹1 lakh may be exempt, but specific rules for foreign shares apply. Reporting is required in ITR-2, with Schedule FA being mandatory for foreign asset disclosure.

The LTCG tax rate on the sale of foreign-listed RSUs is 20% after indexation. If the total LTCG is less than one lakh, no tax is payable. 

The RSUs are taxed as perquisite at vesting and as capital gains at sale. Details of the RSU sale should be reported in the capital gains section of the ITR-2, and foreign tax credits, if applicable, should be claimed using Form-67.

Thanks Sir for the update.
1. But the Exemption of LTCG from Shares not listed on Indian Stock Exchange :   below article says 'No Exemption' allowed (<1 lakh) . Kindly clarify

.   (refer the last table)

2. Also in new ITR-2 > CG > LTCG > Which section to be filled for Foreign RSU sale                (from B1 to B12).  Is it B3 / 112(1) to be used.

3. If the RSU sale happened after 23/July/24, is 12.5% without indexation to be followed .
Thanks.

RSU taxation in India has two stages.

Stage 1 (vesting): When RSUs vest, the FMV on vest date is perquisite income. Employer deducts TDS on this and it appears in Form 16 under Salaries. The FMV on vest date is your cost of acquisition for capital gains.

Stage 2 (sale): Sale price minus FMV on vest date is your capital gain. Holding period runs from vest date, not grant date.
- Less than 24 months from vest: STCG at slab rate.
- 24 months or more from vest: LTCG at 12.5% (no indexation).

Two compliance points:
1. Schedule FA in ITR-2 is mandatory for anyone holding shares in a foreign company, including unvested RSUs. This is a disclosure requirement, not a tax trigger.
2. Dividends received from a foreign company are taxable in India as income from other sources.

For the complete LTCG computation including the pre-July 2024 and post-July 2024 rate split and worked examples, this [capital gains tax guide for AY 2026-27](https://taxgarden.in/blog/capital-gains-tax-india-ltcg-stcg-ay-2026-27) covers both domestic and foreign stock treatment.

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