In plain words: thousands of Indian employees of multinationals hold ESOPs or RSUs of a foreign parent — and many don't realise these are foreign assets that must be disclosed.
ESOPs/RSUs are foreign assets
Shares or units of a foreign holding/employer company — whether vested RSUs, exercised ESOPs, or shares held in a foreign brokerage — are foreign assets that a resident must report in Schedule FA.
The tax points
- At vesting/exercise, the perquisite value is generally taxed as salary.
- On sale, capital gains arise — with foreign tax credit where applicable.
- Any dividends are taxable.
Why employees miss the disclosure
- They think the employer handled everything through payroll.
- They don't see unsold RSUs as 'assets abroad'.
- They overlook the brokerage cash account holding sale proceeds/dividends.
The real risk
Because these holdings are reported to India through information exchange and employer filings, an omission in Schedule FA is easily detected — exposing an otherwise honest employee to penalty.
How to get it right
- List all vested shares/RSUs and the brokerage account.
- Disclose them in Schedule FA each year.
- Reconcile payroll tax and capital gains correctly.
- Correct prior omissions proactively.
Frequently asked questions
Are foreign RSUs a disclosable asset? Yes — vested foreign shares/RSUs must be reported in Schedule FA.
My employer taxed it — am I done? No — disclosure of the asset is separate from payroll tax.
Must I report unsold RSUs? Yes — the holding is disclosable regardless of sale.
How Vakil Help Desk helps
Vakil Help Desk advises residents, returning NRIs and professionals on foreign-asset disclosure (Schedule FA), Black Money Act notices, assessments, penalties and prosecution — alongside linked FEMA and PMLA matters. If you hold foreign assets or have received a notice, we can help you get compliant and respond correctly.
This article is for general legal awareness, not individual legal advice. The Black Money Act, its thresholds, disclosure rules and the tax treatment of foreign assets change over time and depend on your residential status and facts. Please consult a professional before acting on a foreign-asset or disclosure question.