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RSU, ESPP and ESOP – Understanding Meaning and Taxation

by Manish Chauhan · 124 comments

Most of the people who join their first job,  get benefits like RSU, ESOP and ESPP as part of their CTC package (infact this is how employers show a high CTC while recruiting).However most of the employees do not understand these things in the beginning. Over the next few months, they start getting some knowledge about these benefits as employee.

A lot of people confuse these 3 things with each other and often do not have a full understanding of what they mean and how they work and what are the tax implications when they exercise their benefits.We will now take each one of these and understand them.

employee benefits RSU ESOP ESPP India

In this articles lets understand all these 3 things – RSU , ESOP and ESPP in detail.

1. RSU (Restricted Stock Units)

RSU or Restricted Stocks units are very simple to understand. The Company gives company Stock to an employee without any conditions, however there is a vesting period involved. Vesting Period is the tenure for which you will have to wait, before you can claim those shares. So if a company gives you 100 RSU vesting in 2 yrs. That simply means that after 2 yrs, you will get 100 stocks of the company. It will be all yours and you are free to keep them or sell them after that. RSU’s are also a great way to reward the employees, like in 2012 WIPRO awarded 4.5 million RSU’s to its 1200 employees (mostly top management).

RSU’s are a great way to make sure that the employee stays with the employer for long term. Imagine a company, who gives 1000 RSU’s vesting in 4 yrs. An employee will thinking many times before changing his job, because if he leaves the job and moves to another company, then he will loose those RSU’s, which might be worth a lot of money depending on the stock price. I had myself got RSUs from Yahoo, when I joined them, but due to their declining stock price over so many years, RSUs were not a great motivator for me. It was just a bonus amount for myself.

RSU can also be given in phased manner sometimes, like 25% RSU each year. So if company is giving 100 RSU’s with condition of 25% RSU vesting each year, then 25 shares will vest in first year, then another 25% in 2nd year and like this, only after 4th year, an employee will be able to get all 100 stocks.

Its worth noting that if you leave a job, a lot of companies require you to sell your RSU’s in next few months. for example next 3 months.

2. ESOP (Employee Stock Options)

Employee Stock Options or ESOP are generally given by most of the big companies in India, especially IT companies which are listed outside India. ESOPs are nothing but “OPTIONS”, which are also in stock market in India (remember Future & Options?)

Let me tell you what Stock Options are in general. If a person has a Stock Option, he actually has a right to BUY a stock in future at a pre-decided price agreed at the time of giving those stock options. So in future whatever is the market price does not matter, you always have an option to buy it at the price which was agreed upon. In this case if market price of the stock is above the pre-decided price, then you can just exercise your options of buying the stock and instantly you will be in profit. If however, the current market price is less than the pre-decided price, then you choose not to exercise the stock option at all and nothing happens.

Let me give you an example. Let’s say that an employee joins a company on 1st Jan 2013. His company gives him 500 ESOPs with vesting period of 3 yrs and at the vesting price of Rs 200. What this means is that his vesting date is 1st Jan 2016 (after 3 yrs) , On that date, he has a OPTION to buy 500 stocks of the company at Rs 200 if he wishes. Now lets say on 1st Jan 2016 …

Case 1 – The stock price is Rs 800

In this case, the employee can exercise his option and he can get 500 stocks at only Rs 200 . At this moment, the employee will make a clean profit of Rs 600 each shares and a cool Rs 3,00,000 . Note that he does not have to pay anything here, when he exercises his option, he will automatically get his profit without putting anything from his pocket. It makes sense to exercise his option in this case, because vesting price is less than market price.

Case 2 – The stock price is Rs 130

In this case, it does not make any sense to exercise, because you will be in loss, because the price you have to pay is less than market price, so you let this option go.

Note : In case of stock options, you can never make any loss, it will always be some profit only.

3. ESPP (Employee Share Purchase Plan)

ESPP or Employee Share Purchase Plan is a benefit given by employer to its employees to purchase the stock of the company at a discounted price. In an ESPP plan, an employee has to contribute a part of this salary in ESPP plan each month. An employee can choose how much of his salary he wants to contribute by himself. It can range from 1% to 15% of his salary. All the money which he contributes gets accumulated for few months and then in one go, stocks are purchased for him at some discounted price. On what price the discount will be given depends on your company EPSS plan. However in general its the minimum of the prices in the start of the EPSS plan and at the end of the ESPP plan. Let me give you an example.

Suppose your company offers a ESPP plan twice a year which you can opt for, one window opens is Jan-June (where you can join in Jan only) and other is July to Dec (You can join in July only). So you will have to tell the company how much you want to contribute each month before hand. If you choose it to be 10% , then 10% of your salary will be cut for ESPP plan and you will get the rest in your hand.

Now suppose a person chooses Jan-June window and he is contributing 10,000 a month for this, then in next 6 months, he will accumulate Rs 60,000 for ESPP, and now at the end of the Plan he will be able to get the shares.

What will be the share price considered for him ? 

Let’s say that the stock price in the start of the plan (Jan month) was Rs 100 and the stock price at the end of the plan (June) was Rs 120. Then the stock price considered for him will be minimum of 100 and 120 , which is Rs 100 and on this he will get 15% additional discount and his final price would be Rs 85 only.

Note that this example is assuming that minimum of two is taken , your company EPSS might just consider the “starting price” or “ending price” .. So please look at your company EPSS plan in detail.

When to choose ESPP plan ?

ESPP is a great way to get the stock price at discount, but one should anyways take care of few things. If company’s future prospects look great in future, then one should buy the stocks anyway, so ESPP becomes a great deal where you sure shot get 15% discount. However if company’s prospects look bad in future, then you have to figure out if it’d make any sense to go for ESPP plan or  make a better use of your money elsewhere.

Below is a video from Salesforce which explains their ESPP plan, watch it to get a feel of how EPSS works ?

 

Taxation on RSU, ESOPs and ESPP

The taxation for RSU, ESOP’s and ESPP is governed by same rules, as all of them have to deal with stocks which a employee acquires and the taxation is pretty simple to understand. There are just two rules.

Tax to be paid in India

When you sell the your RSU/ESOP/ESPP (after vesting period is over) and get back the money, its your responsibility to pay the tax on the amount in India. How much tax is to be paid by you, depends on the nature of the gains. If you sell the shares before 1 year of acquiring the shares, then the gains are called Short Term Capital Gains (STCG) and if you sell the shares after 1 year, then the gains will logically be Long Term Capital Gains.

If stocks are listed in indian stock exchanges, then you have just have to pay 15% tax on Short Term Capital Gains and no tax on long term capital gains. However if stocks are not listed on indian stock exchanges, but some foreign country, then you will have to add the short term capital gains tax in your income and pay tax as per your slab rate, and 20% with indexation on the long term capital gains, which is the case when STT is not paid when the transaction is done.

Below is the simple table which will explain things to you

[table]
Listed/Gain-Type Short Term Capital Gain (Less than 1 yr) Long Term Capital Gain (More than 1 yr)
Stocks Listed on Indian Stock Exchange 15% Tax on Profits No Tax
Stocks NOT  Listed on Indian Stock Exchange Profits will be treated as your Income and taxed as per your Slab 20% with Indexation
[/table]

Incase Stocks are listed on Foreign Stock Exchange

In these cases, it might happen that when you sell your RSU, ESOP’s or ESPP, the tax is directly cut by the trading portal like etrade (in US) and you only get reduced number of units (after tax). After that when you take the money back in India, you might have to pay the tax on the income again if the double tax treaty is not available with that country.

I hope, you got a lot of clarity about RSU (Restricted Stock Units), ESOPs (Employee Stock Options) , ESPP (Employee Share Purchase Plan). These are some of the benefits employees get and understanding them is very critical for them. Please share if you have any of these benefits and if you had any confusion around them?

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{ 124 comments… read them below or add one }

1 Muthu Krishnan V March 25, 2013 at 10:22 am

i had sold some RSUs listed in france. My chartered accountant said that it will be added to income and taxed at normal rate. He did not know about the 20% with indexation thing.

I should check if I can revise the return and apply for refund.

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2 Paddu March 26, 2013 at 3:10 pm

Did you hold the shares for more than twelve months after they vested, and if so, did you make this clear to your CA? Your CA would have accounted for them assuming short term capital gains.

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3 Muthu Krishnan V March 26, 2013 at 4:58 pm

the RSUs were with me from 2006 and sold in 2011. He was not sure of the rules and hence accounted for max.

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4 Paddu March 26, 2013 at 8:22 pm

If the return was for F.Y. 2010-11, I think you may have only 5 more days to be able to file a revised return, but if the return was for F.Y. 2011-12, I think you have time till 31 Mar 2013.

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5 Muthu Krishnan V March 26, 2013 at 9:42 pm

checked my accounts. It was deposited on 16-may-2011 which is FY 11-12 (just last FY). I should be able to revise it. will shoot out an email to my CA right away.

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6 Manish Chauhan March 27, 2013 at 9:08 am

Great

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7 Paddu April 12, 2013 at 9:00 pm

Actually… time of sale and not time of deposit matters. I think I read this somewhere in the income tax website, probably in some judgment or something. Have no link. :-(

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8 Muthu Krishnan V April 13, 2013 at 10:04 am

i had sold a week before the deposit date. It takes a few days for money to be credited to our account. yes, date of sale and purchase only will matter not the dates of money changing hands.

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9 Muthu Krishnan V January 31, 2014 at 9:08 pm

finally got the cheque in my hand today. There was a goof-up in the bank account details in the revised return and hence bounced in november. after re-applying for refund finally received the cheque today. Have to deposit it in the bank tomorrow. Got the money only due to JagoInvestor. Long live JI.

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10 Manish Chauhan February 1, 2014 at 6:21 pm

Great to hear that Muthu !

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11 Suhas March 25, 2013 at 11:05 am

I have a few questions?
My company gives ESPP and its listed in USA
1) Is there any vesting period in ESPP? I mean once you have been bought the shares after 6 months, you can sell it anytime correct?
2)In my company’s ESPP document I keep seeing something called “US Qualifying date” which according to the document says “Shares sold on or after this date qualify for IRS preferential tax treatment”, Can you explain what this is? Since the stock is in foreign country(USA) , I staying in India can just ignore this?
3) My company adds something called as “ESPP taxable perk”(potential gain) as income, when stocks are purchased after 6 months and according tax is deducted at my tax slab, so should i still add STCG or LTCG as and when i sell the stock?

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12 Paddu March 26, 2013 at 2:48 pm

I assume you get a standard ESPP offer from your company under IRS section 423 [http://en.wikipedia.org/wiki/Employee_stock_purchase_plan]

1) In the general case of stock options, you have a stock option grant, then the options vest, then you can purchase shares in lieu of the options by exercising the options, and then you can sell the shares at any time. In case of ESPP the 6 months period is the vesting period, and the stocks vest & are immediately purchased at the end of the vesting period.

2) That is for U.S. preferential tax treatment. India doesn’t have any preferential tax treatment for holding ESPP shares for long, other than the regular short-term/long-term distinction of capital gains.

3) Suppose the shares were purchased at price P when the market price was M. Later on you can sell the shares at price S with broker commissions, etc. of C. Your company deducts tax on M-P at the time of purchase. Later when you sell you have to declare a capital gain of S-M-C, as though you purchased the shares at M instead of P, since M-P has already been taxed. This capital gain would be short-term/long-term depending on whether you held the shares for at most twelve months, or more.

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13 Paddu March 26, 2013 at 3:03 pm

A slight detail was missed. In case of unlisted companies as well as foreign shares, Indian tax laws require the company to get a category I merchant banker to evaluate the company from time to time and determine the “fair market value”, so the ‘M’ mentioned above may not be the same as the market price in the stock exchange on the date of vest/purchase.

Some small companies don’t go through the hassles of the merchant banker and just use U.S. stock exchange price as M, but this is contrary to the law.

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14 Paddu March 26, 2013 at 3:03 pm

A slight detail was missed. In case of unlisted companies as well as foreign shares, Indian tax laws require the company to get a category I merchant banker to evaluate the company from time to time and determine the “fair market value”, so the ‘M’ mentioned above may not be the same as the market price in the stock exchange on the date of vest/purchase.

Some small companies don’t go through the hassles of the merchant banker and just use U.S. stock exchange price as M, but this is contrary to the rules.

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15 manyam April 4, 2013 at 3:12 am

Hi Paddu,

Why Short Term / Long Term Capital gains applied for US based stocks in india? Is there any specific guidance or document for that?

My understanding:

1) Any income generated out side India are not taxable in India, if we have double tax avoidance agreement with that country. We have such agreement with US.

2) Non Indian RSU – Vested yearly manner to employees by MNC employers in India. Are taxable as income based on equivalent INR value at vesting date. But capital gains will be paid at income generating country (like US), no need pay any taxes on these gains due to selling. Also same applicable for earned dividends on those RSU.

3) ESPP (Non Indian Stocks) :- ESPP contributions are already deducted from payslips, but if employer gives 15% discount that will be treated as income to employee and need to declare in excercised year (stock allocated year). Dividends and capital gains on selling ESPP stocks again not taxable in India, since that income did not generated in India.

If my views are wrong about non indian stocks of RSU/ESPP, please provide any reference links for supporting for pay capital gains taxable in India even that is generated out side of India.

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16 Paddu April 12, 2013 at 9:10 pm

The agreement provides for taxation in the country of residence instead of the country where the income is generated. Thus you can avoid U.S. taxes and pay the taxes in India. There ain’t no such thing as free lunch (TANSTAFL), they only make it easier for us to pay taxes/file returns where we live instead of in the other country.

Specifically the U.S.-India taxation agreement provides for 25% withholding of tax on dividends. I found this after I found E*Trade withholding 25% of my dividend income as taxes. The rest (e.g. 5.9% if you are in 30.9% bracket) is tax to be paid in India. Basically you calculate tax normally, and then the 25% qualifies as rebate under I.T Act Section 90 so you end up paying only the 5.9%.

There are enough references on the ‘net about foreign income being taxed in India. Haven’t you heard of the Vodafone case? :-)

If you are interested in just the case of income to an Indian resident arising in the U.S., search the ‘net for ‘India USA double taxation avoidance agreement’ and read the relevant provisions therein.

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17 Suneet Jindal March 25, 2013 at 1:40 pm

Thanks for the information Manish. One doubt, how will we know that etrade has already taxed us? In my case,they charged me USD45 each for two different transactions made while selling my ESPP/RSU. I think it includes wire-transfer charges also. How do i know if i already paid STT in US itself ?
Plus,where can i get the indexation chart for long-term capital gain for the same?
Thanks in advance.

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18 Paddu March 26, 2013 at 3:09 pm

There’s no STT applicable except in Indian stock exchanges and mutual fund houses and the like. E*Trade usually charges $20 for stock compensation sales + $15 for wiring the funds to India at the time of sale. If your company does withhold tax through E*Trade, you would have around 20.6% or 30.9% deducted from the sale proceeds and this would be visible in E*Trade under ‘View Orders’ or some such menu. If it is just $45 I doubt any tax was withheld there.

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19 Manish Chauhan March 27, 2013 at 11:55 am

You will have to check with them only . However its a known fact that they deduct it themselves (like TDS in India) . For long term indexation numbers , refer to this article http://www.jagoinvestor.com/2009/05/how-to-calculate-capital-gains-and-what_7801.html/

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20 NAGAMOHAN March 25, 2013 at 1:48 pm

Dear Manish,
In case of an ESOP under case-2 explained above because of the price reduction the employee will not exercise his option to buy the shares.
However will the company provide the employee with an equivelent amount of Rs.100000(i.e Rs 200 for 500 stocks) or the employee has to forget the money since this will be included in his CTC package.
I hope the details furnished by you gives a great Insight on the Subject.

Regards

M.Nagamohan

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21 Paddu March 26, 2013 at 4:36 pm

The company does not have any obligation to compensate the employee if the share price goes down. Actually the idea is that if the company gives shares to employees, the employees would be motivated to work in such a way as to maximise returns both for them as well as for the shareholders (maximising returns for the shareholders is the sole aim of any company). If the plan didn’t work well, then tough luck.

If the employee doesn’t feel satisfied with the compensation, and is some bigshot, he/she could probably get the company to compensate him/her in some way or he/she could threaten to resign. :-P

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22 Rahul Vasanth March 26, 2013 at 7:57 am

Thanks for the article! It is quite useful.

Regarding long term capital gains on RSU sell, how do we calculate 20% with indexation. Can you provide an example calculation. Also, how should one get the dollar conversion rate for the computations (my shares were in US eTrade).

Thanks!

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23 Paddu March 26, 2013 at 4:20 pm

Since you mention U.S. shares I will assume there is no ’10% without indexation or 20% with indexation’ option, as that is only for stocks listed in Indian stock exchanges.

For example, in our company we got RSUs in Nov 2006 when the market price was $22.35 and the shares got sold for $45 in May 2011. Assume someone got 10 shares in Nov 2006, and totally 100 shares got sold in May 2011 for which a commission of $20 was charged by E*Trade.

Full consideration (for the above 10 shares only) = $45 * 10 = $450 = Rs. 450 * 44.01 = Rs. 19804.5
Cost of acquisition = $22.35 * 10 = $223.5
Indexed cost of acquisition = $223.5 * 785/519 = $338.0491 = Rs. 338.0491 * 44.9 = Rs. 15178.406
Expenditure on transfer (for the above 10 shares only) = $20 * 10/100 = $2 = Rs. 2 * 44.01 = Rs. 88.02
Long term capital gain = Rs. 19804.5 – Rs. (15178.406 + 88.02) = Rs. 4538.074.

Other input values:
(i) Exchange rate for full consideration and expenditure on transfer = Rs. 44.01/$

Here one has to use the “telegraphic transfer buying rate” quoted by the State Bank of India as of the close of business in the month before the month of the transaction, so in this case 29 April 2011 (30 was a Saturday). However this is difficult to get, and we used the TT rate from Indian Bank from http://www.hindu.com/2011/04/30/stories/2011043099971000.htm instead. Of late, The Hindu has stopped publishing this table online and I am taking exchange rates from the paper version.

The Hindu Business Line publishes some SBI TT buying rate online: http://www.thehindubusinessline.com/industry-and-economy/banking/article1940181.ece but it looks like these rates are only applicable for bulk transactions or something like that, since the rates published here is quite different from the Indian Bank rate, and also my new company has started internally sharing SBI TT rates for RSU vest months, and they also do not match the Hindu Business Line rates.

(ii) Indexation for 2006-7->2011-12 = 785/519

The values for 2006-7 and 2011-12 (or for any other financial year for that matter) can be got by googling “cost inflation index”, and one simply has to take the ratio of sale date to the acquistion date (i.e. vest date for RSUs).

(iii) Exchange rate for cost of acquisition = Rs. 44.9/$

This is simply the value my company took for that RSU vest. My new company takes SBI TT exchange rate as of the close of business the month before the month of vest, and shares the exchange rates internally.

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24 Rahul Vasanth March 27, 2013 at 5:07 pm

Thanks Paddu for the detailed information and calculations!!

One more question – what is the criteria for ‘long-term’ in this case? 1 year?

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25 Rahul Vasanth March 27, 2013 at 5:11 pm

Sorry, I think that is clear from the original article.

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26 Rahul Vasanth March 27, 2013 at 5:25 pm

Paddu,
You computed the Long-Term capital gain to be Rs. 4538.074 in the above example. What would be the tax on it? And, what would be the % of tax in the short-term case? Thanks.

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27 Paddu April 13, 2013 at 8:03 pm

As you had mentioned long-term capital gains tax is 20%. But remember to add 3% education cess so it totally becomes 20.6%. In case of short-term the taxation is like for ordinary income, i.e. depends on your tax slab.

The IT Act defines short-term as ‘not more than twelve months’ for the case of shares, and securities listed in recognised stock exchanges or mutual fund units. Otherwise it is ‘not more than thirty-six months’. If it is not short-term, it is long-term.

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28 praveen July 29, 2013 at 12:12 am

Hi Paddu,

You seem to have applied indexation benefit while calculating CG.

I thought indexation benefit is applicable only for shares traded in Indian Stock exchange. It does not apply to shares traded in foreign exchange.

Are you sure indexation benefit can be applied in this case?

-Praveen

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29 Paddu August 1, 2013 at 4:44 pm

I don’t see anything in the IT Act 1961 that makes indexation specific to “shares traded in Indian Stock exchange”. Only bonds & debentures other than “capital-indexed bonds” are excluded, and Indian shares & debentures excluded in the case of an NRI. In any case I am not a lawyer or a chartered accountant, so I cannot be so sure. :-)

From http://law.incometaxindia.gov.in/DIT/HtmlFileProcess.aspx?FooterPath=D:\WebSites\DITTaxmann\Act2010\DirectTaxLaws\ITACT\HTMLFiles\2012&DFile=section48.htm:

“Provided that in the case of an assessee, who is a non-resident, capital gains arising from the transfer of a capital asset being shares in, or debentures of, an Indian company shall be computed by …

Provided further that where long-term capital gain arises from the transfer of a long-term capital asset, other than capital gain arising to a non-resident from the transfer of shares in, or debentures of, an Indian company referred to in the first proviso, the provisions of clause (ii) shall have effect as if for the words “cost of acquisition” and “cost of any improvement”, the words “indexed cost of acquisition” and “indexed cost of any improvement” had respectively been substituted:

Provided also that nothing contained in the second proviso shall apply to the long-term capital gain arising from the transfer of a long-term capital asset being bond or debenture other than capital indexed bonds issued by the Government :”

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30 Manish Chauhan March 27, 2013 at 10:37 am

In case of RSU , its very simple … You do not have any Purchase Price , so its Rs 0 , because you got it for FREE . Now when you sell it you will get some amount for yourself. Lets say that after 5 yrs , you sold it and your total income was Rs 1 lac as example .

Now this whole 1 lac is your profit , here there is no case of indexation because your cost price itself was Rs 0 . So you have to pay tax on all Rs 1 lac, however if its RSU of a public listed Indian company , your tax will be NIL , because of long term capital gains, but if its a out side india listed company , then 20% of 1 lac , which is Rs 20,000

Manish

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31 Siva March 27, 2013 at 10:43 am

Hi Manish,
For the last few years, it is responsibility of the employer to deduct TDS on RSUs (when vesting). The company cuts tax. So the market price on the vesting day becomes some sort of buying price.
So when one sells it, he needs to pay tax on (selling price – market prices on vesting).

Regards,
Sivasekar

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32 Manish Chauhan March 27, 2013 at 11:47 am

Thanks for that info Siva .

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33 Rahul Vasanth March 27, 2013 at 5:06 pm

Thanks Paddu for the detailed information and calculations!!

One more question – what is the criteria for ‘long-term’ in this case? 1 year?

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34 Paddu April 14, 2013 at 4:33 am

And a few years before the employer used to deduct FBT on RSUs on vesting. So again market price on vesting day “becomes buying price”. Before that there was a catch-all phrase saying “sweat equities or shares given at a discount to market price are perk”, except in case of ESOP plans approved by Commissioner of Income Tax or some such. My example of 2006 was from this time, as my company never seemed to be bothered to get IT approval for ESOP/RSU/ESPP plans.

So only in the rare case of an RSU plan from pre-FBT-on-stock-based-compensation era which was approved by the appropriate IT officials, does Manish’s calculation hold good.

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35 smith March 26, 2013 at 12:29 pm

Good article. Explained in simple manner and easy to understand.

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36 Manish Chauhan March 27, 2013 at 10:20 am

Thanks

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37 Sravan March 26, 2013 at 6:44 pm

Hi Manish,

Can you please clarify me regarding Tax on Long Term Capital Gains?

situation:
My employer gave me 100 shares(listed in NASDAQ) in Jan 2008 and 25% can be vested for each year till Jan 2012.

On Dec 2011, I have sold the 75% of the shares that can be vested.

can you please tell how the taxation will work?

Is it LTCP on 75% of shares
or
LTCP on 50% and STCP on 25% (since jan 2011 to dec 2011 is less than a year)?

Thanks.

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38 Paddu March 26, 2013 at 8:19 pm

Are they RSUs or stock options? If they are stock options and you exercised the options only when you sold in 2011, then you never held shares so all are STCG (what is STCP?).

If they are RSUs, then you should have held them for more than twelve months to claim LTCG, i.e. date of sale minus date of crediting in account (which could be a few days after vest) > twelve months.

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39 Manish Chauhan March 27, 2013 at 9:14 am

Yes, its the second option .. LTCG only on 50% part as they are more than a year old and rest will be STCG , meet your CA to make sure he computes and files the returns properly

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40 Sravan March 27, 2013 at 9:38 am

Is it regardless of ESOP or RSU’s?

As per Paddu’s reply,
>>>If they are stock options and you exercised the options only when you sold in 2011, then you never held shares so all are STCG

Then this implies, whenever i exercise Options, amount will be taxed as STCG. Please correct me if i misunderstood.

I would like tell a situation, where my company grants me options in Jan 2008 (Grant date), with vesting condition of 25% every year (vesting periods) and lets say i sold the 75 % (jan2009, 10&2011) Options in Dec 2011 (Sell date).

Can you please explain how the tax will be calculated on amount i get in Dec 2011. (in this case i can exercise 50% of Options are held for more than a year and 25% are held for less than a year)

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41 Siva March 27, 2013 at 10:40 am

Hi Sravan,
For options, generally the following two things are done together (for ESOPs).
1. the exercising the options (actually buying the shares at option price)
2. selling are done
If you have done this together, then everything is STCG.

If you are just exercising the option (only buying the shares), then you need to pay tax on (market price – option price). This would be added to your taxable income.

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42 Paddu April 13, 2013 at 7:55 pm

You have said that you have only held the options for > a year. But you aren’t selling options. You are exercising your option of buying a share at a discount, but then you are selling immediately, so you have not held the share at all!

Some companies allow paying cash to exercise options. In that case you get whole shares on exercise. These shares can be sold > a year later for LTCG. [But in many cases the tax saved on STCG-LTCG may not justify the upfront payment of cash to convert options to shares.]

Some companies allow “sell-to-cover” where all options are exercised but only some of the shares are sold. This is usually done when someone is leaving the company or the options are expiring. In this case for the part where options are converted to shares & held, they can be sold after > a year to claim LTCG.

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43 Arun March 26, 2013 at 8:33 pm

This is what happens where I work (MNC)

RSU – At time of vesting, the value is added as to your income as “perquisite”. For example, let’s say you received 100 RSUs for 4 years with 25% vesting each year. so each year 25 RSUs vest. So 25 X stock price X dollar value is added to your income. Now its up to you when you sell those RSUs and when you sell if you make a gain or loss. For gain, we need to declare this separately while filing returns. What about this when we make a loss? Can we carry the loss forward and offset it or get a refund?

ESPP – Similar to RSU. The 15% profit is added to your income as “perquisite”.

ESOP – At the time of vesting, nothing is added to your income. But when you sell, the profit is added to your income and taxed as “perquisite”. So there is no separate tax implication.

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44 Manish Chauhan March 27, 2013 at 9:12 am

Yes , for RSU , you can carry it for next 8 yrs just like normal equity sales

For ESPP , if the tax is being deducted by company itself, then they are depositing it with govt as TDS anywyas , you dont need to pay it seperatly !

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45 manyam April 4, 2013 at 1:10 am

For ESPP taxation of MNC US companies. May be depends on company, I don’t think TDS will apply here. Suppose 15% is the discount given by employer, that equivalent India converted INR are taxable income for that financial year in India. During selling time, the capital gain is not taxable in india, but taxable in US (will remit after deduction on gain).

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46 Manish Chauhan April 6, 2013 at 12:00 pm

If the amount is receieved in India, then why will it not be taxable in India ?

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47 manyam April 6, 2013 at 7:32 pm

due to double tax avoidance agreement with US. Source of income generated in US not in India.

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48 Paddu April 12, 2013 at 9:20 pm

U.S.-India DTAA provides for taxation in the country of residence instead of the country of income generation. Obviously there is no distinction on whether it was stock options/ESPP/RSU in the DTAA.

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49 Paddu April 14, 2013 at 4:44 am

If one’s U.S. broker is deducting U.S. tax on capital gains, it means they don’t have a valid W-8BEN certification. This is the form where one declares that he/she is an Indian living in India and the income is not connected to any trade or business in the U.S. One will have to get this recertified ASAP and try to see if previous tax withheld in the U.S. can be refunded by filing returns with the IRS (which I heard is difficult without a U.S. bank account).

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50 Neeraj Sharma June 26, 2014 at 10:00 am

This is very good article and i have understood the calculation for short term and long term gain as well.

But When we sell RSUs and for gain, we need to declare this separately while filing returns, but which ITR form need to be filled ….ITR-1 or ITR-2 ??? this is the main question ..i am not seeing any option in both of these form where we can enter RSU details or short term gain details particular for RSU…

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51 Mukul July 30, 2014 at 8:48 pm

Hi Neeraj,

Did u get an answer to your question? I have the same query but no luck on the net.

“But When we sell RSUs and for gain, we need to declare this separately while filing returns, but which ITR form need to be filled ….ITR-1 or ITR-2 ??? this is the main question ..i am not seeing any option in both of these form where we can enter RSU details or short term gain details particular for RSU…”

regards,
MC

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52 Paddu April 12, 2013 at 9:25 pm

So for ESOP you are doing what is called “same day sale” where the exercise and sale happens on the same day (usually E*Trade does the exercises at the end of the day of sale). Some companies give other options, like using your cash to exercise, or sell a portion of the shares to exercise all the stock options. In that case when you sell the shares separately, you have to pay taxes on the capital gains.

In my company since they use a proper merchant banker evaluation to tax ESOP, the “fair market value” they calculate tax on is different from the sale price. Also there is a $20 E*Trade commission. So there is a separate capital gain/loss involved and usually we end up claiming ~$20 as loss.

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53 dc agrawal March 26, 2013 at 9:13 pm

Mansh ,u have given excellent information for corporate employee.but I have some query.
our company gives us ESOP and our company also deduct tax at the time of exercise(purchase the share).
Tax deduction is applicable :-
exercise day Market rate –ESOP rate=profit amount*30%.
my question?
1.any tax applicable now?
2.If any sell after 1 year of same share any tax applicable?

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54 Manish Chauhan March 27, 2013 at 9:09 am

DC

What they are deducting must be TDS , so in a way you are giving the tax .. but the point is if you really have to pay the tax @30% , are you in 30% tax bracket ? If no , then you are eligible for tax refund for the excess amount . Talk to your CA on this

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55 Vineet March 30, 2013 at 8:55 am

Manish,

With abolishment of FBT, employers have to deduct perquisite tax at the rate of current tax slab. Since employer knows tax slab of employee it should get deducted at correct rate however due to other income/deduction it may be incorrect and needs to be corrected in returns.

http://www.moneycontrol.com/news/tax-expert/fbt-gonepay-perquisite-taxesops-_404795.html

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56 Manish Chauhan April 3, 2013 at 10:47 am

Thanks for that info :)

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57 Jayant March 28, 2013 at 11:17 am

Very crisp information and lucidly explained. Thank you Manish.

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58 Manish Chauhan April 3, 2013 at 5:06 pm

Thanks Jayant :)

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59 Balakrishna sharma April 1, 2013 at 7:06 am

My case is different – I have ESOP options from headquartered in US listed in Nasdaq, vested entirely when I was working in US as a nonresident alien. Relocated/transferred back to India 7 years ago and continue to work for same company till date here in India. Couple of days back I exercised/sold portion of the vested ESOP shares. In this case income tax withheld for US tax(based on #of days I stayed in US) as well as Indian tax by my company – more than 45%on net gain. The reason stated by my company was that I will have to pay US income tax because I was a nonresident alien at the time of vesting period and I will have to pay Indian tax because the gain is treated as a regular income here in India. To me it is a double taxation and not sure anyone experienced this scenario before and anyone successful in collecting refund if any. What are all the options I have..?

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60 Manish Chauhan April 3, 2013 at 9:45 am

I remember there was some form to be filled and submitted to the Trading portal in US where you mention that there will be double taxation in India and they refund you the tax cut there .. Not sure on that but !

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61 Babua Majumdar July 28, 2013 at 8:09 pm

It’s the same for me. I did spend some time in US during vesting, moved to India 9 years back. When I sell my ESOP there’s a tax deduction of 25% in US and TDS being deducted in India at 30.9% rate. Anybody knows what is the withholding rate in US considering the double taxation treaty between India and US?

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62 Manish Chauhan July 29, 2013 at 5:13 pm

Is it the recent incident or 9 yrs old ?

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63 Babua Majumdar July 30, 2013 at 4:37 pm

It’s a recent incident. The IRS says the 25% tax deducted in US is not enough, they want 35%.

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64 Manish Chauhan July 31, 2013 at 5:19 pm

I have no idea about the recent developments in this

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65 Paddu April 12, 2013 at 9:17 pm

I hope you still have a bank account in the U.S. File an income tax return claiming the refund amount with the IRS. (Probably you may need some U.S. auditor to help you with this. Hopefully your company HR is friendly enough to offer this assistance.)

[My colleague got E*Trade selling his/her shares to cover his/her Indian taxes which our company gets from E*Trade & pays CBDT India. For this sale, E*Trade further withheld U.S. taxes by making his/her account balance negative, and thus reducing the amount he/she got the next time he/she sold shares. And he/she didn't get much help in filing the U.S. tax return, and he/she doesn't even have a U.S. bank account, so he/she just decided to forfeit the money. :-(]

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66 hari April 2, 2013 at 5:05 pm

Thanks Manish for this info.
If this article was present 3 years back, I would not have lost money. :)

When I joined my current company, I was allocated a big chunk of ESOPs. I was have zero knowledge of these concepts. When I asked the HR person, he said all the stocks are mine and i can redeem them after some period. Thinking that its all mine, I accepted the offer. But later (after 2 years) I realized that I would be getting only the delta amount, not the entire stock cost.

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67 Manish Chauhan April 3, 2013 at 8:45 am

Hmm.. you should have read more about it :)

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68 Ravi April 25, 2013 at 6:13 pm

Hi Manish,

Can you please help me understand if employer needs to deduct tax while vesting RSUs to employees? this is regarding RSUs alloted by US MNC listed on NYSC and RSU vested to Indian employee based in India.

in another scenario, if employee has bank account in US, can he show income & sell both in US and what will be tax impact in that scenario?

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69 Manish Chauhan April 26, 2013 at 10:37 am

I was into similar situation when I was in YAHOO in bangalore . in mycase , when my RSU;s vested, Yahoo did not cut any tax from their side in India, I had to pay my own tax . Not sure what rules changed from that time !

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70 Neeraj Sharma June 26, 2014 at 10:03 am

Manish…..which ITR form you filled here in your case…..ITR-1 or ITR-2 ??

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71 Manish Chauhan July 3, 2014 at 11:00 pm

Truely speaking my CA takes care of that , I will have to check with him

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72 Vivek June 16, 2013 at 9:37 am

STCG is taxable at 15% while LTCG is taxable at NIL (STT has to be paid).

Gains from Derivatives (Futures and Options ) are always taxable. I guess, in India we do not have Long-term derivatives. So, the question of LTCG in derivatives does not arise.

But, I am not sure about ESOPS. Its essentially a Derivative product (Options). I see no reason why the tax should be zero.

I guess I will have to dig in more to find out.

Will get back to you.

Anyways, as always, a very interesting article.

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73 Manish Chauhan June 22, 2013 at 9:54 am

Thanks for sharing that knowledge !

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74 Abhinav July 2, 2013 at 9:56 am

In case of ESPP, here is what happens with my company (US Nasdaq listed)

As mentioned above, at the time of purchase, the 15% gain (as we received the stock at 15% discount) is calculated based on FMV, and taxed immediately as short term / income tax here in India.

For subsequent purchase, you have mentioned less than 1 year as short term and more than one year as long term.

However information I received is that in case of “Foreign Listed Stocks/Companies), someone mentioned Long term as 2 years, others as 3 years. (I have no particular reference to back this information).

Could you confirm that Long term is indeed more than 1 year ?

BTW this is the best article and discussion on this topic I have found yet :)

Thanks !

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75 Manish Chauhan July 5, 2013 at 10:39 am

Thanks Abhinav :) , share it with others !

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76 Kush July 3, 2013 at 3:30 pm

Hello Manish,

You have very interesting and thought provoking articles. Please keep the good work. I wanted your perspective or guidance on my query if possible.

I was having ESOP from US based company listed in US NASDAQ. I was vested these shares on 01-June-2007 @ USD 0.59/share. I held 361 shares. I sold the shares on 28-June-2012 @USD 16.50/share. My company has deducted Tax @ 30.9 % along with transaction fees and total amounts to apprx. USD 2000 dollars.

I am an Indian resident and file returns in India. Please can you let me know the tax implication and can I claim LTCG. Can I claim a refund of this additional tax deducted along with transaction fees.

How is the LTCG calculated.

Thanks in advance
Kush

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77 Manish Chauhan July 5, 2013 at 10:10 am

Kush

Generally companies do not cut the tax, but that might have changed in last few years . You will not be able to claim LTCG , because its not listed on Indian stock exchange , so its out of the tax purview here .

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78 karthik July 15, 2013 at 6:19 pm

hey manish,

i’m resident according to Income tax, i got RSU of stock which is listed in nasdaq they have deducted tax and given me reduced shares (eg 100 shares rsu they gave me 80shares) how is it taxable in india? will i get tax credit in india? shares are of US co sold. if i sell shares in US how it will be will be taxed.

i have even got ESPP that is also of US co issued there and even sold in US. how will i be taxed in india ?

could you kindly help me in this .

thanks
karthik

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79 Manish Chauhan July 18, 2013 at 3:44 pm

But Karthik

We have already discussed the same in article. where exactly you do not have clarity ?

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80 abc July 16, 2013 at 1:17 pm

How can short-term capital gain tax on ESOP sold in USA be saved? Can it be adjusted against short term capital loss for debt/equities funds in India? Can it also be adjusted against long term capital loss for equities sold in India? Is there any other option?

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81 Manish Chauhan July 18, 2013 at 3:25 pm

But if its not listed in India , then the concept of short term gains (before 1 yr) does not arise

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82 abc July 23, 2013 at 10:34 am

Thanks for the response. Do you mean to say that the short term capital gain on ESOP sold in USA can not be adjusted against any loss (short term or long term) on equity or debt funds?

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83 Sarangarajan July 27, 2013 at 6:49 pm

Following is my question

RSU received (after adjusting for tax) on 10-Dec-2013 and 10-Mar-2013 are 20 & 20. If on 10-Dec-2013 share prices was 30USD and on 10-Mar-2013 it was 32 and if I sell at 35 today — can we use Cost of Index to arrive at todays purchase price and then calculate the short term tax
Purchase price for 10-Dec-2013 shares = 20 Shares * 30 USD * 939/852 (cost of index) = 661 USD
Purchase price for 10-Mar-2013 shares = 20 Shares * 32 USD * 939/852 (cost of index) = 705 USD

Total Sale value = 40 * 35 = 1400 USD
So net Gain/loss = 1400 – 661 -705 = 34 USD (assuming no cost for transfer)

So do I pay 30.09% of 34 USD * today’s USD to INR currency conversion

Please clarify whether the above method is correct.

Thanks and Regards
Sarang

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84 Manish Chauhan July 29, 2013 at 5:30 pm

I think we need long discussion on this , better open a thread on our forum – http://www.jagoinvestor.com/forum/

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85 Amit July 28, 2013 at 11:48 pm

This is a great article. Clarifies a lot of doubt I had till now.

However, I still have one query. For calculating tax on RSU sale, is it the price of “Vesting Date” or the “actual RSU crediting date” taken into account?

In my case, though the RSUs were vested on Feb 28th 2013, the actual shares were credited into my account (and became available for sale) only on Mar 2nd 2013, after 31.1% of the vested shares were sold to adjust for tax.

In this case, will my purchase price be February 28th 2013 or March 2nd 2013?

Please respond ASAP as I need this information to file my tax before July 31st 2013.

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86 Manish Chauhan July 29, 2013 at 5:11 pm

I think it will be vesting date , but there is no standardization in this I guess

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87 Amit August 3, 2013 at 3:23 pm

Thank you so much Manish for your timely response. It really helped.

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88 vin July 29, 2013 at 9:19 pm

Hi Manish,

Thanks for informative article. One query…
for LTCG calculation on ESOP can vesting date be considered in case options are not excersied? or Is it must to exercise options for LTCG?

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89 Manish Chauhan July 31, 2013 at 5:52 pm

No , you have to consider the selling date !

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90 vin August 1, 2013 at 12:26 pm

Thanks Manish for response. I think I was not clear in my query. There is no confusion about selling date. It is more about buying date. Let’s say after ESOP vesting (without excersing) I directly sell those after one year then will it LTCG? or it is mandatory to excersie first and keep it for year to get LTCG benefit. Thanks.

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91 Manish Chauhan August 5, 2013 at 1:02 pm

No , when you sell, its automatically considered to be bought on vesting date, so it will be LTCG

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92 Sarangarajan July 31, 2013 at 10:56 am

Here is the question
Assuming I am provied 70 shares on 10/Dec/2012 post tax (100 RSU provided and 30 shares sold to cover the tax). On that the share prices was $20 and assume 1USD = INR 55

Now if I sell today the share for same price 20 USD but the conversion rate is 60 (1USD=INR 60) — do I need to consider

Selling price = 70 * 20 USD = 1400 USD
Cost Price = 70 * 20 USD = 1400 USD
so GAIN / LOSS == 0 USD — so no gain

Or do we take it as follows

Selling Price = 70 * 20 * 60 = 84000
Cost Price = 70*20*55 = 77000
So GAIN = 7000 hence tax has to be paid for 7000

Please confirm which is the approach

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93 Manish Chauhan July 31, 2013 at 5:12 pm

Its the amount you realised in INDIA . So if you got it in India rupees, then you made the gain in absolute terms. so you will have to pay tax

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94 Sundaresh August 28, 2013 at 2:03 pm

Thanks for all the useful tips and advice ; You have answered a similar query earlier- but I need a little more clarity

Nov 2010 : 140 RSU vested – value of INR 250K
Nov 2012 : 140 RSUs sold – Value 69K

Do I get to claim losses for FY2012-13

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95 Manish Chauhan August 28, 2013 at 8:29 pm

Yes. If its NOT LISTED in India, you should get the benefit !

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96 vasanthi October 28, 2013 at 3:48 pm

I am entitled to 150000 of a Delaware Company’s Class C Common Units.
I have not made an election u/s 83(b).
I had been providing my services from India to a bermuda exempted company being an wholly owned subsidiary of the Delaware Company.
Vesting date is as follows:
effective date (Oct2011) 20%
next vesting date (Dec 2012) 40%
Now in September 2013 I am credited with the cash equivalent of my units that has become vested.
please let me know how this would be taxed for AY 13-14.
Nothing has been offered for tax in the previous assessment years in India.

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97 Manish Chauhan November 4, 2013 at 11:28 am

Please open a thread to discuss this on our forum http://www.jagoinvestor.com/forum

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98 vasanthi November 6, 2013 at 3:48 pm

opened the thread, no respone yet

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99 Manish Chauhan November 12, 2013 at 9:02 pm

Give me the link

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100 vasanthi November 14, 2013 at 6:51 pm
101 krishna_nair November 13, 2013 at 9:17 pm

I had some of the allotted RSU’s vested in the year 2009 for which perquisite tax was deducted and reflected in my Form-16. Subsequently in the following year 2010, I sold the shares below the FMV. The shares are listed in the US. I incurred no profit due to capital gains.
Am I liable to any tax because of this, considering that perquisite tax has been deducted and no subsequent profit was made?

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102 Manish Chauhan November 14, 2013 at 2:21 pm

No tax in that case !

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103 vasanthi November 14, 2013 at 6:52 pm
104 Ashish ARORA November 17, 2013 at 11:39 pm

All, I here’s my situation: I am an employee of an Indian subsidiary of aUS based Nyse listed company. The parent company has granted me esops which is were vested and excersised by me before the company went public. My Indian employer deducted TDS on the gains made by me per the book valueoof the stock. The company has now gone public. My questions are as follows:

If I sell my shares will I be charged taxes in US?
When I transfer the money to India will I have to pay taxes in India?
Which broker in In USA provides accounts to jon resident aliens?

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105 lalit December 30, 2013 at 6:35 am

Hi i have ESPP shares that i acquired between 2007 and 2009 while in us. Now i am in india and not had nri status for more than 3 years. If i sell the shares now what taxes will be imposed on me. The stock is not listed in india.

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106 Manish Chauhan January 4, 2014 at 12:08 pm

Surely you need to pay the tax, because eventually money will arrive in India in your account and its your income IN INDIA !

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107 sridhar January 28, 2014 at 10:23 pm

Fantastic. Very nice material.
please let me know which section of taxation rule is this covered?

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108 Manish Chauhan January 30, 2014 at 5:15 pm

I am not aware of the exact section number. Why do you need it ? A CA will be able to point that out to you !

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109 Raja February 16, 2014 at 2:38 pm

Hi. I had acquired some rupee denominated shares of my previous employer based in India through ESOP. They were vested in 2008. As the company has not listed itself on to the stock exchange (yet to go through IPO), the shares are blocked i.e. I am not allowed to sell. However out of blue, they have paid me some dividend income and that income has been paid in to my bank account few months back. How should I treat the taxability of this income in my income tax returns for AY 2014-15?

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110 Manish Chauhan February 21, 2014 at 11:30 am

Dividends from Shares are TAX FREE !

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111 Yogesh Patil February 25, 2014 at 5:30 pm

Hi Manish,
I need your help here. I joined a company in India 6 years ago and got 100 ESOP at vesting price $1/share. When I left company the price was $3/share. To buy the ESOP I paid $100 + Income tax of flat 30% on $2 (Price when I left company – Vesting Price). I guess it is called capital gain. Now Company may go IPO next year in USA. Here are my question

1. Can I sell my stocks when company go IPO. Some website says that ex-employee can not share stocks still one year from the date of IPO. Is this true?

2. What happens to the Tax paid on additional $2. How can I show my earlier tax paid. Assuming market price $6, Will I have to pay Income tax on just $3. If yes, how much % of tax needs to be paid.

3. Since company will be listed in US. Will I have to pay tax in USA and India. I never been to USA. If yes, how much % in india and how much % in USA. If only in india, how much % tax.

4. What all things can I do to save tax.

Thanks

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112 Manish Chauhan March 3, 2014 at 10:13 am

1. This will be decided as per your company policy. You should read your contract for this

2. Did you pay tax in US or India ? I think there is a form which you need to fill up (I dont remember the form name) and then you will get a certificate

3. Due to double tax treaty, if you have already paid tax in US , then you dont need to pay that in INdia,but you need to show a certificate for this. I suggest you hire a good CA on this matter

Manish

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113 Jeeten February 26, 2014 at 7:57 pm

Hi,

Is the same First in First Out method used for calculating capital gains for MNC RSUs? My account has date wise details of different RSUs that were acquired and I sold something in between. Should I be calculating capital gains considering FIFO or the one I sold.

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114 Manish Chauhan March 2, 2014 at 7:05 pm

Yes , FIFO method should be used !

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115 Jeeten March 3, 2014 at 10:09 am

Thanks Manish

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116 Bis March 3, 2014 at 3:06 pm

Thanks for the great article Manish. But I’m fairly confused with the “two stage” taxation of ESOP (http://www.livemint.com/Money/PKUJZ2fkMSPPTJu30VeJXI/There-are-two-stages-of-taxation-for-ESOP.html). In my case I have MNC listed in US ESOPs . I sold some stocks after my vesting period. The stock broker is Fidelity, first they cut 30% tax in USD and then refund the amount through Indian Payroll. India payroll
has cut some ‘prerequisite’ tax as part of Fom-16 IT computation. Now the question is whether I need to again add the final gain (which I got and transferred through wire from US to India) as part of my “Other Income” and pay 30% tax on it? Then it will be too much of a tax!

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117 Manish Chauhan March 12, 2014 at 9:55 pm

I am not sure if I have full understanding , but as far as I know, you can bypass the tax second time if you fill up a form downloaded from US tax website . Not very sure of it .. ask on our forum http://www.jagoinvestor.com/forum

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118 Deepak March 11, 2014 at 2:05 am

Hi Manish ,Thanks for the very Good information about RSU,ESOP’s.
I am trying to understand What Are the tax implications of Dividend incomes from MNC’s (NYSE registered) company as per Indian Tax Laws.

Please advise…

Thanks in Advance

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119 Manish Chauhan March 12, 2014 at 4:43 pm

DIdnt get your query ? What is “divided income” ?

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120 Deepak March 13, 2014 at 12:35 am

Hi Manish..What i meant was “Dividend”..profits shared by a company to its shareholders maybe like a quarterly or yearly payout.In my case I am purchasing ESPP of my company (MNC (NYSE registered)).I am getting dividend cheques every Qtr..I am trying to understand Indian Tax Law related to dividend income from US based company.I am aware that dividend from Indian companies are Tax Free as of now in hands of Share Holder.Hope that clarifies my query..Sorry for confusion.

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121 Manish Chauhan March 26, 2014 at 8:06 pm

Hmm .. Indian dividend income is tax free, but I am not sure what about US company dividend , please ask it on our forum – http://www.jagoinvestor.com/forum

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122 Bala May 15, 2014 at 3:54 pm

Dear Manish,
The article was very helpful to understand the taxation. But I am confused where to enter these details in ITR2 form.
For example if I have LTCG from foreign ESPP which section of ITR2 needs to be used?

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123 Manish Chauhan May 19, 2014 at 8:47 am

Hi Bala

Hire a CA for help at this level . This was just an entry level article to help you understand the concept !

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124 Amit July 31, 2014 at 3:45 pm

My company gave me RSU, which are listed in US. They opened a a/c for me with morgon stanley in US. I do have some vested RSUs in last financial year. My company already deducted tax on the vesting day and my Form-16 has the required entry.
Do I need to report it as a foreign account in ITR-2 – TA_FR section in type E?

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