Tax on RSU in India: What you need to know

Work for a company based in India? One of the benefits you might receive are Restricted Stock Units (RSUs), a kind of employee compensation.

While this benefit may be great to have, as it means you’ll eventually end up owning shares in the company, it’s also important to understand any tax implications linked to your RSUs.

In this helpful guide, we’ll run through everything you need to know about India RSU tax. This includes info on the different types of taxes you may encounter, along with tax rates and who is affected.

We’ll also show you how the Wise account could be the perfect solution for when it comes to selling your RSUs in a different currency. A Wise account lets you hold and convert between 40+ currencies, for low fees* and mid-market exchange rates.

But first, a quick overview of what RSUs are and how they work.

Learn more about the Wise account💡

What are RSUs?

Restricted Stock Units (RSUs) are a type of employee compensation or benefit issued by a company. They are essentially a promise to transfer shares in the company to an employee according to a set schedule.

A company may want to offer them as an incentive for new employees, helping them secure the best talent. Or they may grant RSUs to staff on different occasions, such as on an annual basis, to reward long service or when the company reaches a particular milestone or performance-related target.

The key thing to note is that RSUs don’t have monetary value at the time they’re granted. After a set period of time known as a ‘vesting period’, the RSU will convert to actual stock which can be sold for a cash value.

Read more about the difference between RSUs and stock options here in our handy guide.

When RSUs are sold, there will almost certainly be tax implications. This is what we’ll be exploring below, specifically in relation to India’s RSU taxes. The country has its own tax laws, and it’s crucial to understand how they’ll affect you in this situation.

How are RSUs taxed in India?

Now, let’s take a look at exactly how RSUs are taxed in India, including tax rates and who is affected.

When are RSUs Taxed? (Vesting vs. Sale)

In India, RSUs are not taxed at the time they are granted. This is the same as in many countries worldwide.

They only become taxable when they are vested, which is the point at which the RSUs are transferred over to you as shares.¹

At this point, you may become liable for income tax based on the fair market value of the shares on the vesting date.¹ This will be added to your taxable income as an employee, and tax will be due according to the relevant income tax rates - we’ll look at that in more detail shortly.

The way tax is applied/deducted can vary depending on what happens on the vesting date. Possible scenarios include:¹

• Sell to cover - this is where you exercise your RSUs and the employer deducts income tax at source
• Same-day-sale - if all shares are sold on the same day, tax is paid to the government and you receive the remaining funds (receiving the cash equivalent rather than the actual shares)
• Upfront payment - you pay tax on the shares and receive them upfront.

Want to sell your shares? In India as in many other countries worldwide, the profits from selling investments are subject to capital gains tax (CGT).¹

You may face additional taxes or complications if you’re a tax resident in another country, and you sell your shares. For example, if you are still considered a tax resident in the UK, you may have to pay capital gains tax when selling stocks under the UK’s tax rules.

This is why it’s crucial to seek professional, personalised tax advice to make sure you understand your obligations and don’t end up paying too much tax.

Breakdown of Income Tax, Capital Gains Tax, and Other Levies

When your RSUs vest, you may be liable for income tax based on their market value. This is because your RSUs and shares are seen as supplementary employment income.

To give you an idea of what your tax bill is likely to be, here are India’s income tax rates for the year from April 2025:²

There’s also capital gains tax to consider, for when you decide to sell your shares. The rate you’ll pay depends on how long you’ve had the shares, and whether they are shares listed on the National Stock Exchange of India (NSE):¹

• For shares listed on the NSE - CGT is 12.5% for shares held for under 12 months, 20% for shares held longer than this. There is an exemption for long-term capital gains of up to 125,000 INR.
• For shares not listed on the NSE - tax is applied at income tax rates for shares held for less than 24 months, otherwise gains are taxed at 12.5%.

And as we mentioned above, you’ll also need to check whether you’re liable for CGT, income tax or other levies back in the UK.

Who is affected by RSU taxes in India?

If you are an Indian resident, you’ll be liable for taxes on RSUs and shares held in India as well as income from other countries.³

If you’re a resident of another country, RSUs (relating to overseas employment) held or sold outside India are not taxable in India.³

It’s wise to get professional tax advice though, just to make sure holding or selling RSUs in India doesn’t come with tax obligations.

Use Wise to save on unnecessary currency fees on your next share or RSU payout

After reading this, you should have a better idea of how tax on RSUs works in India - and how the country’s tax laws apply to you.

Key takeaways to remember:

• RSUs are only taxed when vested, not when granted
• You may have to pay income tax when your RSUs are vested
• You may have to pay capital gains tax when you sell your shares
• It’s crucial to get professional tax advice to understand your tax obligations and avoid double taxation, especially if you’re a UK tax resident.

But it’s also important to think about the best way to manage share profits and dividends - especially if it’s in multiple currencies.

Without the right type of account or transfer service, you could end up losing out to high fees and poor exchange rates for currency conversion.

Wise is the ideal solution, helping you manage your money in 40+ currencies and convert between them whenever you need to.

Thanks to its low fees* and mid-market exchange rates, you could save a bundle on currency conversion fees. For an example of how it could benefit you, check out this guide to using Wise for RSU payouts in USD.

Ready to make new investments? It’s easy to fund your portfolio or top up an account on a trading platform using your Wise account - which lets you securely send money worldwide in just a few clicks.

FAQs about RSU tax in India

Still have questions about RSU tax in India? Take a look below for a handful of commonly asked questions and answers that you may find useful.

How are stocks taxed in India?

In India, income and profits from personal investments is subject to capital gains tax.

The rate ranges from 12.5% to 20% depending on how long you’ve held the shares and whether the stocks are listed on the National Stock Exchange of India (NSE) or elsewhere.

However, you shouldn’t pay other kinds of income tax on personal investments, unless they are RSUs or another kind of employee benefit linked to your employment.

How do RSUs work in India?

Restricted Stock Units (RSUs) issued by Indian companies tend to work in a similar way to other countries.

They are granted as part of employee compensation packages, along with details of the vesting schedule and the number of units issued. They may be linked to performance targets or other key milestones.

Once they vest, they become taxable - and the employee can choose whether to sell them.

How to avoid double taxation on RSU in India?

If you live and work between two countries (i.e. the UK and India), there’s a risk that you end up paying tax on the same income in both jurisdictions. This is known as double taxation.

Tax can be complicated and can depend on your personal circumstances, so the best way to avoid double taxation on RSUs in India is to seek personalised advice from an overseas tax specialist.

This publication is provided for general information purposes and does not constitute legal, tax or other professional advice from Wise Payments Limited or its affiliates, and it is not intended as a substitute for obtaining advice from a tax advisor or any other professional.

Sources used:

Sources last checked on date: 05-Mar-2025