What to Do With Your RSUs When You Move Back to India

Moving back to India does not mean you have to sell your RSUs. Your vested shares can stay in your US brokerage account, and unvested grants may keep vesting if you stay with your employer. What changes is the set of decisions you need to make, and some of them only work if you make them before you land.

The short answer: map your vesting dates against your last working day, check whether your broker will keep serving you as a non-resident, and decide what to sell while you are still RNOR. This guide walks through each decision in the order you will face it. For the tax rules themselves, see our guide on how RSUs are taxed in India.

Before you move: line up your vesting schedule with your last day

Start with a simple calendar. List every vest date for the next 12 to 18 months, the number of shares in each, and the date you plan to stop working in the US. The gap between those dates is where most value is won or lost.

Settle three things before you hand in your notice:

• Whether you are resigning, continuing remotely for the same employer, or moving to its India office. Each leads to a different outcome for unvested RSUs, covered in the next section.
• Whether your grant agreement has a post-termination vesting window or an acceleration clause, and when your next vest falls.
• Your records. Download every vesting confirmation, your W-2s and your brokerage statements while you still have easy access. You will need the vesting-date value of each lot later, in dollars and in rupees.

If your move is not voluntary, the 60-day H-1B grace period compresses all of this. Our guide on what to do if you were laid off on an H-1B covers that case.

What happens to unvested RSUs

Before you can plan around unvested RSUs, you need to know what your grant agreement says. Many returning NRIs find their options are more limited than expected.

If you resign before you move

This is where most people get caught off guard. Most unvested RSUs are forfeited on your last day of employment. They do not carry over. Some grant agreements include a post-termination vesting window, often around 90 days, and some have acceleration clauses, sometimes called "double trigger" provisions, that apply on certain qualifying events.

Tip: read your grant agreement before you resign. If the next vest is a week or two away, a short delay in your last working day can be worth a lot.

If you keep working for the same employer from India

Your RSUs usually keep vesting on schedule. Check two things with your HR or equity team. First, some plans restrict vesting or need approval when an employee relocates abroad. Second, ask whether the company will run Indian payroll for you, sometimes called shadow payroll, because part of each future vest will be taxable in India. The section on RSUs that vest after you land explains why.

If you transfer to your employer's India office

An internal transfer usually keeps your grants alive, because you have not left the company. Your Indian employer will typically withhold Indian tax on the part of each vest that relates to your work in India.

If you join a new Indian employer that grants RSUs

RSUs from an Indian employer are Indian-source income whatever your residential status. They are taxed as a perquisite in the year of vesting, added to your salary at slab rates. RNOR does not shelter this income.

Keep, sell or transfer your vested RSUs

Vested RSUs are ordinary shares in your brokerage account, and moving to India does not force you to do anything with them. The right choice depends on when you need the money, how concentrated you are in one stock, and how large your unrealised gain is.

There is no single right answer, but this is how the decision usually goes:

When to sell: use your RNOR window

If you plan to sell, timing matters more than anything else. During your RNOR years, typically the first 2 to 3 years after you return, selling US-listed shares does not create capital gains tax in India, as long as the proceeds are received outside India. On the US side, a nonresident alien generally pays no US tax on capital gains from US shares, unless they spend 183 days or more in the US that year.

Once you become Resident and Ordinarily Resident (ROR), the same sale is taxed in India: at slab rates for shares held 24 months or less, and at 12.5% for longer holdings. Many returning NRIs use the RNOR window to sell and rebuy, which resets their cost to the current price. Our step-by-step guide shows how to reset your cost basis during RNOR, and you can check how long your RNOR window lasts before you plan around it.

Your US brokerage account after you move

You can keep your US brokerage account. FEMA allows a resident Indian to hold foreign shares and accounts acquired while they were a non-resident, so you do not need to close it or sell everything. What you do need to do:

• Check your broker's policy before you change your address. Some US brokers restrict or close accounts for clients living abroad. Find out first, so you can move the account on your terms rather than under a deadline.
• Replace your W-9 with a W-8BEN. The W-9 you gave as a US tax resident no longer applies once you are a nonresident alien. A W-8BEN certifies your foreign status and lets the broker apply the 25% treaty rate on US dividends. Here is how to update your W-8BEN.
• Transfer rather than sell if you are changing brokers. A regular brokerage account can usually move to another broker through ACATS without selling. Shares in an employer stock plan account usually move by a free-of-payment DTC transfer instead. Unvested RSUs cannot be transferred and stay with the plan administrator until they vest.
• Use LRS for new purchases. Shares you already hold can stay. New money you send abroad to buy more shares as a resident falls under the Liberalised Remittance Scheme, with a limit of $250,000 per person per financial year.
• Track your cost in rupees. For Indian capital gains, the cost of each lot is its value on the vesting date converted to rupees. Keep a record for every vest.

RSUs that vest after you start working from India

This is where many returning NRIs get it wrong. An RSU that vests after you move is not automatically foreign income. India treats pay for work done in India as income earned in India, whatever your residential status, and RNOR does not shelter it.

So if you keep working for your US employer from India, or transfer to its India office, each vest is usually split by where you worked during the vesting period. The part linked to your US working days is foreign income, which India does not tax while you are RNOR. The part linked to your India working days is taxable in India, even in your RNOR years. The US may also tax the part earned while you worked in the US, and the India-US tax treaty lets you claim credit for tax paid twice on the same income.

For example, if a grant vests over 24 months and you worked 12 of them in the US and 12 in India, roughly half of that vest is taxable in India. Keep evidence of where you worked, such as passport stamps and travel records. Our guide on how RSUs are taxed in India explains how the perquisite value and capital gains are worked out.

Bringing the money home

When you sell, you do not have to bring the money to India straight away. Proceeds can stay in your US account, or you can move them to a Resident Foreign Currency (RFC) account in India and keep them in dollars. Keep the sale confirmation and the bank record of each transfer, because they show the money came from assets you held before you returned.

If you are moving larger amounts or closing several US accounts at once, our repatriation checklist for returning NRIs covers the order to do it in.

Your yearly checklist once you are ROR

Once you become ROR, your US shares become part of your yearly Indian tax filing:

• Report the shares and the brokerage account in Schedule FA of ITR-2 every year, even if you sold nothing. Our step-by-step guide shows how to report your RSU shares in Schedule FA.
• Report dividends at your slab rate, and claim credit for the 25% US withholding by filing Form 67.
• Report any sale as capital gains, using your rupee cost for each lot.
• Keep vesting confirmations, broker statements and transfer records for every year.

Schedule FA does not apply while you are NRI or RNOR. Missing it once you are ROR can attract a Rs 10 lakh penalty per year under the Black Money Act, unless your foreign assets other than immovable property total Rs 20 lakh or less.

Common mistakes returning NRIs make with RSUs

• Resigning just before a vest. Many people forfeit unvested RSUs by leaving a week or two before a scheduled vest. A short delay could save significant value.
• Assuming every vest after the move is tax-free while RNOR. RNOR shelters foreign income only. The part of a vest earned while working in India is taxable in India.
• Changing your address before checking with your broker. Some brokers restrict accounts once they see a foreign address, which can force a rushed transfer or sale.
• Selling after the RNOR window closes. The RNOR window is finite. People who do not act during it often realise in year four or five that they could have sold without Indian tax.
• Not coordinating US and India filings. If your US preparer and your Indian CA do not talk to each other, you may pay tax twice on the same income. Form 67 and the India-US tax treaty exist to prevent this, but only if they are claimed correctly.
• Missing your first ROR year for Schedule FA. Disclosure becomes mandatory in the year you become ROR, for every foreign asset held that year.

Conclusion

Moving back with RSUs comes down to a few decisions made in the right order. Time your last working day around your vesting dates, and sort out your brokerage account before you change your address. Then decide what to sell while you are RNOR, and keep track of which part of each later vest India will tax. Get those right and the tax side follows.

If you want help mapping your RSUs, vesting dates and RNOR window before you move, book a consultation with InvestMates at investmates.io.