How are foreign RSUs taxed?

How are foreign RSUs taxed?

Short Answer is RSU’s are not taxed twice. If they would have been taxed twice you would have Govt document of the country deducting tax saying that tax has been deducted. Like Form 16/Form 16A provided by Indian Govt or Form 1042-S provided by US when the tax is deducted on the dividend of US compnaies.

How are taxes on RSUs calculated?

RSUs are taxed as income to you when they vest. The tax treatment of RSUs is no different than if you were to receive a cash bonus (on the vesting date) and then use that cash to buy your company’s stock. To summarize: Tax at vesting date is: # of shares vesting x price of shares = Income taxed in the current year.

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How are RSU taxed in India?

In case the shares are not listed on Indian stock exchanges, profits will be viewed as the employee’s income and taxed depending upon the tax slab for Short Term Capital Gains, and 20\% with indexation will be charged on Long Term Capital Gains.

How do I claim tax paid outside India?

Documents required to be furnished for claiming FTC

  1. A statement of : foreign income offered to tax.
  2. Certificate or statement specifying the nature of income and the amount of tax deducted therefrom or paid by the taxpayer : From the tax authority of the foreign country.
  3. Proof of payment of taxes outside India.

How do I calculate cost basis for RSU?

Once again, your cost basis for the shares you sold is the amount your employer included on your W-2 for those shares, which is the closing price on the vesting date times the number of shares you sold for tax withholding ($50 * 41 = $2,050).

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How is FTC calculated in India?

FTC shall be determined by conversion of the currency of payment of the foreign tax at the Telegraphic Transfer Buying Rate on the last day of the month immediately preceding the month in which such tax has been paid or deducted.

What is the tax impact of RSUs on your return?

Tax impact on RSUs arise when these vest. At the time of vesting your gains are not capital in nature and the income earned by you has to be disclosed under other income in your income tax return. When you sell these vested stocks and have a gain, at this moment your gains are taxed as capital gains.

Is RSU taxable in India?

The cost will be taken as nil as these are allotted to you free and the entire capital gains will be taxable in India in case you are resident at the time of sale. The taxation of RSU is dependent on your residential status.

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How to allocate RSUs to the US and India?

If you performed services for the company in both the US and in India during the time period for which you received the RSUs, then you have to allocate the income from the RSUs to the US and to India. The most common way of doing this is by using the number of days you spent working in each location.

Do I have to pay capital gain tax if I Sell RSUs?

You have to pay short term capital gain tax if you sell the RSUs within 2 years from vest. Short term capital gain is added to your tax bracket and taxed as per your tax slab. If you sell the shares after 2 years from vest you will be eligible for long term capital gain taxed at 20\% with indexation benefit.