MNC Senior Employee — Managing RSU Taxation Across India and the United States
RSU grants made during a US posting, vesting after an India transfer, with two tax authorities and one DTAA sitting between the grant and the sale. Breaking it down event by event made it manageable — and getting the DTAA credit right is where the real saving sat.
What the engagement demanded.
A senior technology professional had worked with a US-listed company for six years, split between the New York office and its Mumbai entity. He had received RSU grants during his US tenure, several of which vested while he was in India after his transfer back. When his RSUs vested and he sold the shares, his India employer’s payroll team advised that the perquisite value would be added to his salary and taxed in India. Simultaneously, he was uncertain whether the US would also seek to tax the gain, since the grants were made during his US residency period. He needed clarity on both sides of the tax position before filing, and the payroll team’s worst-case estimate was significantly higher than necessary.
How we executed the engagement.
Grant-by-Grant Mapping
Mapped each RSU grant against the client’s residential status at the date of grant, vesting, and sale — establishing which jurisdiction had taxing rights at each stage and where apportionment was required.
Income Apportionment
For grants made during US residency that vested in India, computed the India-taxable portion based on the proportion of vesting days spent in India, and the US-taxable portion for the balance.
India Perquisite Computation
Computed the perquisite value as fair market value on the vesting date per Rule 3 of the Income Tax Rules, confirmed the correct TDS treatment with the employer payroll team, and coordinated the Form 12BA disclosure.
Capital Gains Computation
Established FMV at vesting as the cost of acquisition for the India capital gains computation on the eventual sale of shares, and determined the applicable holding period and tax rate for each tranche.
US DTAA Credit Coordination
Coordinated with a US CPA to ensure India tax paid on the perquisite was correctly reflected and credited in the US return under the India-US DTAA, eliminating double taxation on the same income.
The capabilities we brought to bear.
Cross-Border RSU Tax Mapping
Grant-vest-sale analysis across US and India residency periods, with precise jurisdiction-specific tax treatment at each event — not a blended approximation.
Perquisite Valuation & TDS
Correct FMV computation under Rule 3, employer TDS advisory to ensure payroll deducted the right amount, and Form 12BA coordination.
Capital Gains Treatment
FMV at vesting as cost of acquisition, holding period computation per relevant Indian provisions, and applicable long-term or short-term tax rate per tranche.
India-US DTAA Credit
Article 25 foreign tax credit computation and US CPA coordination to ensure taxes paid in India were properly credited in the US return, fully avoiding double taxation.
The results we delivered.
RSU taxation looks complicated because it has three separate tax events — grant, vest, and sale — across potentially two countries. Breaking it down event by event makes it manageable, and getting the DTAA credit right is usually where the real saving sits.
