If you work for an Indian subsidiary of a multinational company, there's a good chance you've received RSUs, ESOPs, or ESPPs from the foreign parent company at some point. And if you're like most salaried employees, you've probably assumed your ITR filing is still straightforward — after all, your salary is your salary, right?

Not quite. The moment foreign equity enters the picture, your tax filing changes in ways that are easy to miss and expensive to get wrong.

You may not be able to file the simple ITR form anymore

Most salaried employees default to ITR-1, the simplest return. But holding foreign assets — including unsold RSUs or ESOP shares — typically makes you ineligible for ITR-1 (and ITR-4). You'll usually need to file ITR-2 or ITR-3 instead, which involve far more disclosures than the form you're used to.

There can be two separate taxable events

RSUs and ESOPs aren't taxed just once. There's typically a tax event when the shares vest (treated as a perquisite, taxed as part of your salary), and a separate tax event when you eventually sell the shares (taxed as capital gains, short-term or long-term depending on the holding period). Many people only think about the second event and completely miss the first.

Schedule FA is where most people get caught off guard

If you hold foreign shares — even if you haven't sold them — you're generally required to disclose them under Schedule FA (Foreign Assets) in your ITR. This isn't optional, and it isn't the same as just reporting capital gains. Missing this disclosure isn't a minor oversight either — it can attract scrutiny and penalties under the Black Money Act, which are far more serious than a regular late-filing penalty.

You might be taxed twice — unless you claim the right relief

Depending on the country your parent company is based in, you could end up paying tax both there and in India on the same income. India's tax treaties (DTAA) with various countries often provide relief from this double taxation — but only if it's claimed correctly, with the right documentation.

Why this matters more than people realize

None of this is meant to alarm you — but it is meant to be honest. RSU/ESOP/ESPP taxation involves multiple moving parts: vesting schedules, FMV calculations at vesting and sale, currency conversion, foreign asset disclosure, and potential treaty relief. A single missed step can mean either overpaying tax unnecessarily or under-reporting and inviting a notice later.

If you've received equity from a foreign parent company, it's worth having your filing reviewed by someone familiar with cross-border equity taxation — before you file, not after a notice arrives.

[Talk to us about your RSU/ESOP/ESPP tax filing →