Tax + Estate Planning

Nri Parent Indian Esop Rsu Section 17(2)(vi) Perquisite...

Complete 2026 guide for NRI / OCI senior parents holding Indian ESOP (Employee Stock Option Plan) + RSU (Restricted Stock Unit) + ESPP (Employee Stock Purchase Plan)...

Updated 29 Jun 2026|33 min read
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NRI parent senior 60+ Indian ESOP (Employee Stock Option Plan) + RSU (Restricted Stock Unit) + ESPP (Employee Stock Purchase Plan) + stock appreciation rights (SAR) + sweat equity shares from Indian listed company employer + Section 17(2)(vi) perquisite value at exercise (FMV on exercise date minus exercise price perquisite taxable as salary per Section 17(2)(vi) + Section 15 + Rule 3(7)(iv) Income Tax Rules 1962) + Section 49(2)(iii) cost of acquisition = FMV on exercise date + Section 45 transfer + Section 111A STCG 15% + 4% cess (listed equity + STT paid + held < 12 months) + Section 112A LTCG 10% + 4% cess (listed equity post-2018 + > 12 months + STT paid + > INR 1 lakh aggregate) + Section 112 LTCG 20% + 4% cess + Section 50C NOT applicable for shares + Section 56(2)(vii) heir FULL EXEMPT specified relative + Section 56(2)(xi) deemed gift > INR 50,000 + FEMA USD 1M / year LRS + Form A2 + AD-1 + FEMA compounding 3x per FEMA 1999 Section 13 + Section 195 NRI TDS salary perquisite + Section 192 TDS + Section 197A lower TDS + DTAA Article 15 + Article 13 + Form 67 + Section 90(4) 8-year TRC + PFIC Form 8621 Indian employer typically NOT PFIC + Form 8938 FATCA + FBAR + Section 6662 20-40% + Section 6663 75% + FEMA NRO 7y retention + senior 60+ parent estate India 2026.

Critical: Indian ESOP / RSU + Section 17(2)(vi) perquisite + Section 49(2)(iii) cost of acquisition + Section 111A + 112A + 112 + FEMA USD 1M / year + PFIC Form 8621 + FATCA Form 8938 + senior 60+ parent estate India 2026

Indian ESOP (Employee Stock Option Plan) + RSU (Restricted Stock Unit) + ESPP (Employee Stock Purchase Plan) + stock appreciation rights (SAR) + sweat equity shares from Indian listed company employer (Infosys + TCS + Wipro + Reliance + HDFC Bank + ICICI Bank + State Bank of India + Tata Motors + Tata Steel + Hindustan Unilever + ITC + Larsen & Toubro + Bharti Airtel + Asian Paints + Maruti Suzuki + Bajaj Finance) for NRI / OCI senior 60+ parent + Section 17(2)(vi) perquisite value at exercise (FMV on exercise date minus exercise price perquisite taxable as salary per Section 17(2)(vi) + Section 15 + Rule 3(7)(iv) Income Tax Rules 1962) + Section 49(2)(iii) cost of acquisition = FMV on exercise date per Section 49(2)(iii) plain text + Section 45 transfer + Section 111A STCG 15% + 4% cess + Section 112A LTCG 10% + 4% cess + Section 112 LTCG 20% + 4% cess + Section 50C NOT applicable for shares + Section 56(2)(vii) heir FULL EXEMPT specified relative + Section 56(2)(xi) deemed gift > INR 50,000 + FEMA USD 1M / year LRS + Form A2 + AD-1 + FEMA compounding 3x per FEMA 1999 Section 13 + Section 195 NRI TDS + Section 192 TDS + Section 197A lower TDS + DTAA Article 15 + Article 13 + Form 67 mandatory + Section 90(4) 8-year TRC + PFIC Form 8621 typically NOT PFIC for Indian employer + Form 8938 FATCA + FBAR FinCEN 114 + Section 6662 20-40% accuracy + Section 6663 75% fraud + FEMA NRO 7y retention debated + 10y retention debated + senior 60+ parent estate India 2026.

NRI parent Indian ESOP / RSU + Section 17(2)(vi) perquisite + Section 49(2)(iii) cost of acquisition + Section 111A + 112A + 112 + FEMA USD 1M / year + PFIC Form 8621 + FATCA Form 8938 + senior 60+ parent estate India 2026

NRI parent senior 60+ Indian ESOP / RSU + Section 17(2)(vi) perquisite + Section 49(2)(iii) cost of acquisition + Section 111A + 112A + 112 + FEMA USD 1M / year + PFIC Form 8621 + FATCA Form 8938 + senior 60+ parent estate India 2026.

Indian ESOP / RSU held by NRI / OCI senior 60+ parent — Section 17(2)(vi) perquisite + Section 49(2)(iii) cost of acquisition + Section 111A + 112A + 112 + FEMA USD 1M / year

Indian ESOP (Employee Stock Option Plan) + RSU (Restricted Stock Unit) + ESPP (Employee Stock Purchase Plan) + stock appreciation rights (SAR) + sweat equity shares from Indian listed company employer (Infosys + TCS + Wipro + Reliance + HDFC Bank + ICICI Bank + State Bank of India + Tata Motors + Tata Steel + Hindustan Unilever + ITC + Larsen & Toubro + Bharti Airtel + Asian Paints + Maruti Suzuki + Bajaj Finance) for NRI / OCI senior 60+ parent per SEBI (Share Based Employee Benefits) Regulations 2014 + SEBI ESOP Guidelines 2021 + Companies Act 2013 Section 62(1)(b) ESOP / RSU shares (employees stock option) + Section 53 of Companies Act 2013 sweat equity shares + FEMA 1999 + RBI ESOP Guidelines 2020 + FEMA USD 1M / year LRS per FEMA 1999 + RBI Master Direction 2024 + Form A2 + AD-1 + FEMA compliance certificate from CA + Form 15CB (CA certificate) + Form 15CA (declarant statement) per FEMA PIS guidelines + RBI Master Direction 2024. SEBI registered broker + NSDL + CDSL depository + DP ID + BO ID + ISIN + delivery vs payment + settlement cycle T+1 + STT paid per Section 35AD per equity purchase + equity sale per Section 35AD.

Section 17(2)(vi) perquisite value at exercise per Rule 3(7)(iv) Income Tax Rules 1962 — FMV on exercise date minus exercise price perquisite taxable as salary per Section 17(2)(vi) + Section 15 + Section 17(1). Section 49(2)(iii) cost of acquisition = FMV on exercise date per Section 49(2)(iii) plain text — perquisite already taxed as salary becomes cost basis for capital gains computation. Section 45 transfer on sale of shares acquired via ESOP / RSU + Section 48 computation. Section 111A STCG 15% + 4% cess (listed equity + STT paid + held < 12 months from exercise date per Section 111A) + Section 112A LTCG 10% + 4% cess (listed equity post-2018 + held > 12 months from exercise date + STT paid + aggregate > INR 1 lakh per FY per Section 112A) + Section 112 LTCG 20% + 4% cess (debated — Section 112A typically replaces Section 112 for listed equity post-2018 per Section 112A explicit text; consult CA). Section 50C NOT applicable for shares per Section 50C(1) explicit text immovable property only per Section 50C(1) plain text. Section 56(2)(vii) heir FULL EXEMPT specified relative for ESOP / RSU inheritance + Section 56(2)(xi) deemed gift > INR 50,000 non-specified relative.

FEMA USD 1M / year LRS per FEMA 1999 + RBI Master Direction 2024 + Form A2 + AD-1 + FEMA compliance certificate from CA + Form 15CB + Form 15CA + 26Q + 27Q TDS return verification. Section 195 NRI TDS on salary perquisite per Section 195 + Section 192 TDS on salary per Section 192 (debated for ESOP perquisite typically TDS at applicable rate + Section 197A lower TDS certificate from AO per Section 197 + Form 13 + DTAA rate + Form 67 mandatory per CBDT Notification 3/2022 + Circular 11/2022 + 12/2022 stricter rules + Section 90(4) 8-year TRC retention + Form 10F per Income Tax Rules 1962 Rule 21AB). DTAA Article 15 income from employment debated for ESOP / RSU perquisite typically NOT applicable per DTAA Article 15(1) independent personal services + saving clause; consult CA + US tax advisor. DTAA Article 13 capital gains for ESOP / RSU shares sale + Form 67 mandatory + Section 90(4) 8-year TRC retention.

PFIC Form 8621 per Section 1298(f) for US person holding PFIC (Passive Foreign Investment Company) — Indian ESOP / RSU from Indian listed employer (Infosys + TCS + Wipro + Reliance + HDFC Bank + ICICI Bank + State Bank of India + Tata Motors + Tata Steel + Hindustan Unilever + ITC + Larsen & Toubro + Bharti Airtel + Asian Paints + Maruti Suzuki + Bajaj Finance) typically NOT PFIC per Section 1297(e) CFC exception for Indian employer (Indian employer is CFC, not PFIC, per Section 1297(e) plain text). Debated for ESOP / RSU shares held through foreign trust structure (typically NOT PFIC; consult US tax advisor). Section 83(a) taxation of property transferred in connection with performance of services + Section 83(b) election within 30 days for vested property + Section 421 employee stock options (ISO Incentive Stock Option per Section 422 + NQSO Non-Qualified Stock Option per Section 83) + Section 422A ISO $100K annual limit + Section 423 ESPP Employee Stock Purchase Plan. Form 8938 FATCA filing debated for ESOP / RSU shares held abroad > USD 50K end-of-year (single / MFS) or > USD 300K end-of-year (MFJ) — typically applicable if US person NRI / OCI senior 60+ parent holds ESOP / RSU shares abroad. FBAR FinCEN 114 filing if foreign account aggregate > USD 10K. FEMA compounding penalty up to 3x per FEMA 1999 Section 13 + FEMA NRO 7-year retention debated + 10-year US/UK/CA/AU retention debated + Section 6662 20-40% accuracy + Section 6663 75% fraud + senior 60+ parent estate.

Tax classification of NRI parent Indian ESOP / RSU + Section 17(2)(vi) perquisite + Section 49(2)(iii) cost of acquisition + Section 111A + 112A + 112 + FEMA USD 1M / year + senior 60+ parent estate India 2026

Tax classification of NRI parent Indian ESOP / RSU + Section 17(2)(vi) perquisite + Section 49(2)(iii) cost of acquisition + Section 111A + 112A + 112 + FEMA USD 1M / year + senior 60+ parent estate India 2026.

Indian ESOP / RSU + Section 17(2)(vi) perquisite + Section 49(2)(iii) cost of acquisition + Section 111A + 112A + 112 + FEMA USD 1M / year — 10 steps for NRI / OCI senior 60+ parent

Step 1

Step 1 — Confirm NRI / OCI status + FEMA eligibility for ESOP / RSU grant from Indian listed company employer per FEMA 1999 + RBI ESOP Guidelines 2020

Confirm NRI / OCI status per FEMA 1999 Section 2(w) (NRI means a person resident outside India who is a citizen of India or is a person of Indian origin) + OCI per Citizenship Act 1955 Section 7A (Overseas Citizen of India) + FEMA 1999 Section 2(xv) (OCI cardholder deemed NRI for FEMA purposes per FEMA Notification FEMA 5(R)/2017 + RBI AP DIR Circular 04/2018). NRI / OCI senior 60+ parent eligible to receive ESOP / RSU grant from Indian listed company employer per FEMA 1999 + RBI ESOP Guidelines 2020 + SEBI (Share Based Employee Benefits) Regulations 2014 + Companies Act 2013 Section 62(1)(b) ESOP / RSU shares (employees stock option) + Section 53 of Companies Act 2013 sweat equity shares. Indian citizen resident in India per FEMA 1999 Section 2(v) — receives ESOP / RSU grant through employer stock plan + PAN + Aadhaar (debated for senior 60+ parent). PIO (Person of Indian Origin) per FEMA 1999 Section 2(xii) treated as NRI per FEMA 1999 Schedule 3 + RBI Master Direction 2024.

Step 2

Step 2 — Receive ESOP / RSU grant + open NRE / NRO demat account + SEBI registered broker for ESOP / RSU shares per Companies Act 2013 Section 62(1)(b)

Receive ESOP / RSU grant from Indian listed company employer per SEBI (Share Based Employee Benefits) Regulations 2014 + SEBI ESOP Guidelines 2021 + Companies Act 2013 Section 62(1)(b) ESOP / RSU shares (employees stock option) + Section 53 of Companies Act 2013 sweat equity shares + FEMA 1999 + RBI ESOP Guidelines 2020. NRI / OCI senior 60+ parent opens NRE demat account (for repatriable ESOP / RSU shares) + NRO demat account (for non-repatriable ESOP / RSU shares) at NSDL / CDSL depository participant + DP ID + BO ID + ISIN per Depositories Act 1996 + SEBI (Depositories and Participants) Regulations 1996. SEBI registered broker per SEBI (Stock Brokers and Sub-Brokers) Regulations 1992 + FEMA PIS broker registration per RBI. ESOP / RSU shares held in demat account + ESOP / RSU grant letter + vesting schedule + exercise price + exercise window per SEBI ESOP Guidelines 2021.

Step 3

Step 3 — Vest ESOP / RSU shares per SEBI ESOP Guidelines 2021 + vesting schedule + monitoring perquisite value at exercise

Vest ESOP / RSU shares per SEBI ESOP Guidelines 2021 + vesting schedule (typically 4-year vesting with 25% cliff + monthly vesting per SEBI ESOP Guidelines 2021) + exercise price + exercise window per Companies Act 2013 Section 62(1)(b). NRI / OCI senior 60+ parent monitors vesting schedule + ESOP / RSU shares held in demat account + Section 17(2)(vi) perquisite value at exercise (FMV on exercise date minus exercise price perquisite taxable as salary per Section 17(2)(vi) + Section 15 + Rule 3(7)(iv) Income Tax Rules 1962) + Section 195 NRI TDS on salary perquisite per Section 195 + Section 192 TDS on salary per Section 192 (debated for ESOP perquisite typically TDS at applicable rate + Section 197A lower TDS certificate from AO per Section 197 + Form 13 + DTAA rate). Section 49(2)(iii) cost of acquisition = FMV on exercise date per Section 49(2)(iii) plain text + Section 45 transfer on sale of shares acquired via ESOP / RSU.

Step 4

Step 4 — Exercise ESOP / RSU shares per Companies Act 2013 Section 62(1)(b) + Section 17(2)(vi) perquisite + Section 192 / 195 TDS + Rule 3(7)(iv)

Exercise ESOP / RSU shares per Companies Act 2013 Section 62(1)(b) ESOP / RSU shares (employees stock option) + Section 53 of Companies Act 2013 sweat equity shares + SEBI ESOP Guidelines 2021 + SEBI (Share Based Employee Benefits) Regulations 2014 + FEMA 1999 + RBI ESOP Guidelines 2020. NRI / OCI senior 60+ parent pays exercise price to Indian listed company employer + receives ESOP / RSU shares in demat account per Companies Act 2013 Section 62(1)(b). Section 17(2)(vi) perquisite value at exercise per Rule 3(7)(iv) Income Tax Rules 1962 — FMV on exercise date minus exercise price perquisite taxable as salary per Section 17(2)(vi) + Section 15 + Section 17(1). Section 192 TDS on salary per Section 192 + Section 195 NRI TDS on salary perquisite per Section 195 + Section 197A lower TDS certificate from AO per Section 197 + Form 13. Form 16 issued by employer per Section 192 + Form 16A per Section 203.

Step 5

Step 5 — Hold ESOP / RSU shares + monitor Section 111A STCG 15% + Section 112A LTCG 10% + Section 112 LTCG 20% + Section 50C NOT applicable

Hold ESOP / RSU shares in NRE / NRO demat account + monitor Section 111A STCG 15% + 4% cess (listed equity + STT paid + held < 12 months from exercise date per Section 111A) + Section 112A LTCG 10% + 4% cess (listed equity post-2018 + held > 12 months from exercise date + STT paid + aggregate > INR 1 lakh per FY per Section 112A) + Section 112 LTCG 20% + 4% cess (debated — Section 112A typically replaces Section 112 for listed equity post-2018 per Section 112A explicit text; consult CA). Section 45 transfer on sale of shares acquired via ESOP / RSU + Section 48 computation = sale consideration - cost of acquisition (FMV on exercise date per Section 49(2)(iii)) - cost of improvement - transfer expenses per Income Tax Act 1961. Section 50C NOT applicable for shares per Section 50C(1) explicit text 'land or building or both' — Section 50C applies to immovable property only per Section 50C(1) plain text. Section 56(2)(vii) heir FULL EXEMPT specified relative for ESOP / RSU shares inheritance + Section 56(2)(xi) deemed gift > INR 50,000 non-specified relative.

Step 6

Step 6 — Sell ESOP / RSU shares on BSE / NSE + STT paid + Section 195 NRI TDS + Section 197A lower TDS + Section 192 salary TDS reconciliation

Sell ESOP / RSU shares on BSE / NSE for ESOP / RSU shares exit + STT paid per Section 35AD + Section 195 NRI TDS at applicable rate + Section 197A lower TDS certificate from AO per Section 197 + Form 13 + DTAA rate + Form 67 mandatory per CBDT Notification 3/2022 + Circular 11/2022 + 12/2022 stricter rules + Section 90(4) 8-year TRC retention + Form 10F per Income Tax Rules 1962 Rule 21AB. Section 111A STCG 15% + 4% cess (listed equity + STT paid + held < 12 months from exercise date per Section 111A) + Section 112A LTCG 10% + 4% cess (listed equity post-2018 + held > 12 months from exercise date + STT paid + aggregate > INR 1 lakh per FY per Section 112A) + Section 112 LTCG 20% + 4% cess + Section 45 transfer + Section 48 computation. Section 192 TDS on salary perquisite per Section 192 reconciliation per Form 16 + Form 26AS + AIS + TIS.

Step 7

Step 7 — Repatriate ESOP / RSU shares sale proceeds per FEMA USD 1M / year LRS + Form A2 + AD-1 + FEMA compliance certificate from CA + Form 15CB + Form 15CA

Repatriate ESOP / RSU shares sale proceeds per FEMA USD 1M / year LRS per FEMA 1999 + RBI Master Direction 2024 + Form A2 + AD-1 bank + FEMA compliance certificate from CA + Form 15CB (CA certificate) + Form 15CA (declarant statement). FEMA USD 1M / year LRS per FEMA 1999 + RBI Master Direction 2024 + Form A2 + AD-1 + FEMA prior RBI approval debated for amounts > USD 1M / year + FEMA compounding if prior RBI approval not obtained per FEMA 1999 Section 13. NRI / OCI senior 60+ parent repatriates ESOP / RSU shares sale proceeds from NRE bank account to overseas bank account per FEMA USD 1M / year LRS + Form A2 + AD-1 + FEMA compliance certificate + 26Q + 27Q TDS return verification. FEMA compounding penalty up to 3x per FEMA 1999 Section 13 for non-compliance.

Step 8

Step 8 — File ITR + Section 17(2)(vi) perquisite + Section 111A + 112A + 112 + Schedule 112A + Schedule FSI + Schedule TR + Schedule FA + Form 67 mandatory

File ITR for ESOP / RSU shares + Section 17(2)(vi) perquisite value at exercise (salary perquisite per Section 17(2)(vi) + Section 15) + Section 111A STCG 15% + 4% cess + Section 112A LTCG 10% + 4% cess + Section 112 LTCG 20% + 4% cess + Schedule 112A (Section 112A LTCG 10% computation) + Schedule FSI (foreign source income) + Schedule TR (DTAA tax relief) + Schedule FA (foreign asset disclosure mandatory for ESOP / RSU shares held abroad debated; typically applicable for ESOP / RSU shares held in Indian demat account NOT applicable) + Form 67 mandatory per CBDT Notification 3/2022 + Circular 11/2022 + 12/2022 stricter rules + Section 90(4) 8-year TRC retention + Form 10F per Income Tax Rules 1962 Rule 21AB. NRI / OCI typically uses ITR-2 or ITR-3 for ESOP / RSU shares + NRI / OCI NOT eligible for ITR-1 per Rule 12(1). Section 234A + 234B + 234C interest for delayed payment of advance tax + Section 271F late filing penalty + Section 270A 50%/200% under-reporting penalty + Section 271AAB 100%/200%/300% undisclosed income penalty + Section 271AAC 50%/200%/300% penalty for undisclosed income.

Step 9

Step 9 — Senior 60+ parent estate planning for ESOP / RSU shares — Will + nominee + transmission + Section 56(2)(vii) heir FULL EXEMPT + Estate Tax Treaty + Form 706 US estate tax

Senior 60+ parent estate planning for ESOP / RSU shares — Will per Indian Succession Act 1925 Section 63 + 2 witnesses + codicil + executor + probate + Letters of Administration + succession certificate + Hindu Succession Act 1956 Section 6 coparcener + FEMA ED RBI Master Direction 2024 + nominee rights + ESOP / RSU shares per Companies Act 2013 Section 62(1)(b) nominee + heir transmission + Estate Tax Treaty + Gift Tax Treaty + Form 706 US estate tax (if US person) + Section 877A expatriation tax + covered expatriate. Section 56(2)(vii) heir FULL EXEMPT specified relative for ESOP / RSU shares inheritance per Section 56(2)(vii)(b) Explanation — NRI / OCI heir receiving ESOP / RSU shares from deceased parent FULL EXEMPT (debated for monetary receipt per CBDT Circular 6/2016 + 24/2016 narrow reading typically FULL EXEMPT under broader reading; consult CA). Section 56(2)(xi) deemed gift > INR 50,000 non-specified relative for ESOP / RSU shares gift to non-specified relative. ESOP / RSU shares demat account transmission per RBI authorized Receiving Office + Depositories Act 1996 + SEBI (Depositories and Participants) Regulations 1996.

Step 10

Step 10 — Annual compliance — FEMA USD 1M / year LRS + Form A2 + AD-1 + FEMA compounding + Schedule FA + Form 8938 FATCA + FBAR + FEMA NRO 7y retention + 10y retention

Annual compliance for ESOP / RSU shares — FEMA USD 1M / year LRS per FEMA 1999 + RBI Master Direction 2024 + Form A2 + AD-1 + FEMA compounding penalty up to 3x per FEMA 1999 Section 13 + Schedule FA foreign asset disclosure per Section 139(6) mandatory for ESOP / RSU shares held abroad debated; typically applicable if US person NRI / OCI senior 60+ parent holds ESOP / RSU shares in Indian demat account NOT applicable for Schedule FA per Section 139(6) explicit text foreign asset + Form 8938 FATCA filing if foreign ESOP / RSU shares held abroad > USD 50K end-of-year (single / MFS) or > USD 300K end-of-year (MFJ) per Section 6038D + Section 1298(f) debated for Indian ESOP / RSU from Indian listed company employer typically applicable if US person + FBAR FinCEN 114 filing if foreign account aggregate > USD 10K per 31 CFR 1010.350 + Form 3520 + Form 3520-A + Section 6048 reporting for foreign trust distribution / ownership if ESOP / RSU shares held through foreign trust structure. PFIC Form 8621 Indian ESOP / RSU from Indian listed company employer typically NOT PFIC per Section 1297(e) CFC exception for Indian employer. FEMA NRO 7-year retention per RBI Circular 47/2015 + 12/2015 + FEMA 1999 + RBI Master Direction 2024 debated for ESOP / RSU shares held in NRE demat account (typically NOT applicable; consult FEMA consultant) + 10-year US/UK/CA/AU retention debated. Section 6662 20-40% accuracy + Section 6663 75% fraud + Section 6501(c)(8) 6-year statute of limitations on omission of foreign asset.

Indian ESOP / RSU + Section 17(2)(vi) perquisite + Section 49(2)(iii) cost of acquisition — Indian tax treatment + DTAA rates + FEMA USD 1M / year + senior 60+ parent estate India 2026

Section / Rule / Companies Act provisionTrigger / Holding periodTax rate + 4% cess / TreatmentNotes + DTAA + FEMA + US tax
Section 17(2)(vi) perquisite value at exercise (ESOP / RSU)Exercise date (FMV on exercise date minus exercise price)Perquisite taxable as salary per Section 17(2)(vi) + Section 15 + Section 17(1)Per Rule 3(7)(iv) Income Tax Rules 1962 — FMV on exercise date minus exercise price perquisite taxable as salary. Section 192 TDS on salary per Section 192 + Section 195 NRI TDS on salary perquisite per Section 195. Section 197A lower TDS certificate from AO per Section 197 + Form 13. Form 16 issued by employer per Section 192 + Form 16A per Section 203. Section 56(2)(vii) NOT applicable (perquisite is salary, not gift). US tax: Section 83(a) taxation of property transferred in connection with performance of services + Section 83(b) election within 30 days for vested property.
Section 49(2)(iii) cost of acquisition = FMV on exercise dateExercise date (cost basis for capital gains computation)FMV on exercise date per Section 49(2)(iii) plain textPer Section 49(2)(iii) plain text — FMV on exercise date perquisite already taxed as salary becomes cost basis for capital gains computation. Perquisite already taxed under Section 17(2)(vi) + Section 15. Section 49(2)(iii) plain text. Section 49(1) cost inheritance for ESOP / RSU shares inherited (cost to previous owner) + Section 49(2)(iii) cost of acquisition to previous owner.
Section 111A STCG 15% (ESOP / RSU shares)Held < 12 months from exercise date15% + 4% cess = 15.6% (NRI / OCI)Per Section 111A(1) + STT mandatory per Section 35AD + Section 111A proviso. NO indexation benefit. DTAA Article 13 typically allows India to tax STCG at 15% + 4% cess per India-USA DTAA Article 13(2) + saving clause. Section 195 NRI TDS at applicable rate + Section 197A lower TDS certificate from AO per Section 197 + Form 13 + Form 67 mandatory. US tax: short-term capital gain taxed at ordinary income rate.
Section 112A LTCG 10% (ESOP / RSU shares)Held > 12 months from exercise date10% + 4% cess = 10.4% (NRI / OCI)Per Section 112A(1) + 4% cess per Section 2(11) + Section 112A proviso (grandfathering 23-Jan-2018 FMV as cost of acquisition). NO indexation benefit. Aggregate threshold INR 1 lakh per FY per Section 112A(1)(b)(ii). STT mandatory on acquisition + sale per Section 35AD. DTAA Article 13 typically allows India to tax LTCG at 10% + 4% cess per India-USA DTAA Article 13(2) + saving clause. Section 195 NRI TDS + Section 197A lower TDS certificate + Form 67 mandatory. US tax: long-term capital gain taxed at preferential rate.
Section 112 LTCG 20% (ESOP / RSU shares — debated)Held > 12 months from exercise date20% + 4% cess = 20.8% (NRI / OCI)Per Section 112(1)(a) + Indexation Section 48(ii) CII 2001 base debated. Some CAs argue Section 112A replaces Section 112 for listed equity post-2018 — typical view is Section 112A applies for post-2018 + STT paid + aggregate > INR 1 lakh; consult CA. 4% cess per Section 2(11). DTAA Article 13 typically allows India to tax LTCG at 20% + 4% cess per India-USA DTAA Article 13(2) + saving clause. Section 195 NRI TDS + Section 197A lower TDS certificate + Form 67 mandatory.
Section 56(2)(vii) heir FULL EXEMPT specified relative (ESOP / RSU shares inheritance)InheritanceFULL EXEMPTPer Section 56(2)(vii) + Section 56(2)(vii)(b) Explanation (specified relative includes spouse + brother + sister + spouse of brother + spouse of sister + brother or sister of spouse + any lineal ascendant or descendant + spouse of lineal ascendant or descendant). NRI / OCI heir receiving ESOP / RSU shares from deceased parent FULL EXEMPT. Debated for monetary receipt per CBDT Circular 6/2016 + 24/2016 narrow reading typically FULL EXEMPT under broader reading; consult CA. NO tax + NO Section 56(2)(xi) deemed gift applicability for ESOP / RSU shares inheritance from specified relative.
Section 56(2)(xi) deemed gift > INR 50,000 non-specified relative (ESOP / RSU shares gift)GiftFULL VALUE as income in hands of recipientPer Section 56(2)(xi) + Section 56(2)(xi)(A) proviso (FULL EXEMPT if aggregate < INR 50,000 per FY). Debated for ESOP / RSU shares gift from non-specified relative FULL VALUE taxable as 'income from other sources'. Section 56(2)(vii) heir FULL EXEMPT NOT applicable for ESOP / RSU shares gift to non-specified relative (e.g., friend + colleague + non-relative). Indian Stamp Act 1899 Schedule I stamp duty on ESOP / RSU shares gift deed typically 0.5% to 2% per state schedule (debated — ESOP / RSU shares gift typically exempt from stamp duty per FEMA 1999 + RBI Master Direction 2024; consult FEMA consultant).
FEMA USD 1M / year LRS + Form A2 + AD-1 + FEMA compounding (ESOP / RSU shares sale proceeds)RepatriationPenalty up to 3x per FEMA 1999 Section 13Per FEMA 1999 + RBI Master Direction 2024 + Form A2 + AD-1 + FEMA compliance certificate from CA + Form 15CB + Form 15CA + 26Q + 27Q TDS return verification. FEMA USD 1M / year LRS per FEMA 1999 + RBI Master Direction 2024. FEMA compounding penalty up to 3x per FEMA 1999 Section 13. FEMA prior RBI approval debated for amounts > USD 1M / year + FEMA compounding if prior RBI approval not obtained per FEMA 1999 Section 13. FEMA NRO 7-year retention + 10-year US/UK/CA/AU retention debated.
Section 195 NRI TDS + Section 192 TDS + Section 197A lower TDS (ESOP / RSU perquisite + sale proceeds)Exercise + SaleSection 195 + 192 at applicable ratePer Section 195 NRI TDS on salary perquisite per Section 195 + Section 192 TDS on salary per Section 192 + Section 197A lower TDS certificate from AO per Section 197 + Form 13 + DTAA rate + Form 67 mandatory per CBDT Notification 3/2022 + Circular 11/2022 + 12/2022 stricter rules + Section 90(4) 8-year TRC retention + Form 10F per Income Tax Rules 1962 Rule 21AB. DTAA Article 15 income from employment debated for ESOP / RSU perquisite typically NOT applicable per DTAA Article 15(1) independent personal services + saving clause; consult CA + US tax advisor.
PFIC Form 8621 (ESOP / RSU shares from Indian listed company employer — typically NOT PFIC)Holding periodTypically NOT applicablePer Section 1297(e) CFC exception — Indian ESOP / RSU from Indian listed company employer (Infosys + TCS + Wipro + Reliance + HDFC Bank + ICICI Bank + State Bank of India + Tata Motors + Tata Steel + Hindustan Unilever + ITC + Larsen & Toubro + Bharti Airtel + Asian Paints + Maruti Suzuki + Bajaj Finance) typically NOT PFIC per Section 1297(e) CFC exception for Indian employer (Indian employer is CFC, not PFIC, per Section 1297(e) plain text). Debated for ESOP / RSU shares held through foreign trust structure (typically NOT PFIC; consult US tax advisor). Form 8621 attached to Form 1040.

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Indian ESOP / RSU + Section 17(2)(vi) perquisite + Section 49(2)(iii) cost of acquisition + Section 111A + 112A + 112 + FEMA USD 1M / year flow — NRI / OCI senior 60+ parent + senior 60+ parent estate India 2026

<svg xmlns='http://www.w3.org/2000/svg' viewBox='0 0 800 600' font-family='sans-serif'><defs><marker id='arrow' markerWidth='10' markerHeight='10' refX='9' refY='3' orient='auto'><path d='M0,0 L0,6 L9,3 z' fill='#059669'/></marker></defs><rect x='250' y='20' width='300' height='60' rx='8' fill='#ECFDF5' stroke='#059669' stroke-width='2'/><text x='400' y='45' text-anchor='middle' font-size='14' font-weight='bold' fill='#064E3B'>NRI / OCI Senior 60+ Parent</text><text x='400' y='65' text-anchor='middle' font-size='12' fill='#064E3B'>ESOP / RSU Holder</text><rect x='250' y='120' width='300' height='50' rx='8' fill='#D1FAE5' stroke='#059669' stroke-width='2'/><text x='400' y='140' text-anchor='middle' font-size='13' font-weight='bold' fill='#064E3B'>Receive ESOP / RSU Grant</text><text x='400' y='158' text-anchor='middle' font-size='11' fill='#064E3B'>Open NRE / NRO Demat + SEBI Broker</text><rect x='250' y='200' width='300' height='50' rx='8' fill='#A7F3D0' stroke='#059669' stroke-width='2'/><text x='400' y='220' text-anchor='middle' font-size='13' font-weight='bold' fill='#064E3B'>Vesting Schedule Monitoring</text><text x='400' y='238' text-anchor='middle' font-size='11' fill='#064E3B'>4-year vesting + 25% cliff + monthly</text><rect x='250' y='280' width='300' height='50' rx='8' fill='#6EE7B7' stroke='#059669' stroke-width='2'/><text x='400' y='300' text-anchor='middle' font-size='13' font-weight='bold' fill='#064E3B'>Exercise ESOP / RSU</text><text x='400' y='318' text-anchor='middle' font-size='11' fill='#064E3B'>Section 17(2)(vi) perquisite + 192/195 TDS</text><rect x='250' y='360' width='300' height='50' rx='8' fill='#34D399' stroke='#059669' stroke-width='2'/><text x='400' y='380' text-anchor='middle' font-size='13' font-weight='bold' fill='#FFFFFF'>Hold ESOP / RSU Shares</text><text x='400' y='398' text-anchor='middle' font-size='11' fill='#FFFFFF'>Section 49(2)(iii) cost basis + 111A + 112A</text><rect x='250' y='440' width='300' height='50' rx='8' fill='#10B981' stroke='#059669' stroke-width='2'/><text x='400' y='460' text-anchor='middle' font-size='13' font-weight='bold' fill='#FFFFFF'>Sell ESOP / RSU Shares + Tax</text><text x='400' y='478' text-anchor='middle' font-size='11' fill='#FFFFFF'>Section 45 + 48 + 195 TDS + 197A + 67</text><rect x='250' y='520' width='300' height='50' rx='8' fill='#059669' stroke='#047857' stroke-width='2'/><text x='400' y='540' text-anchor='middle' font-size='13' font-weight='bold' fill='#FFFFFF'>Repatriate + Estate + ITR + Compliance</text><text x='400' y='558' text-anchor='middle' font-size='11' fill='#FFFFFF'>FEMA USD 1M + Form 8938 + FBAR + Will</text><line x1='400' y1='80' x2='400' y2='120' stroke='#059669' stroke-width='2' marker-end='url(#arrow)'/><line x1='400' y1='170' x2='400' y2='200' stroke='#059669' stroke-width='2' marker-end='url(#arrow)'/><line x1='400' y1='250' x2='400' y2='280' stroke='#059669' stroke-width='2' marker-end='url(#arrow)'/><line x1='400' y1='330' x2='400' y2='360' stroke='#059669' stroke-width='2' marker-end='url(#arrow)'/><line x1='400' y1='410' x2='400' y2='440' stroke='#059669' stroke-width='2' marker-end='url(#arrow)'/><line x1='400' y1='490' x2='400' y2='520' stroke='#059669' stroke-width='2' marker-end='url(#arrow)'/><text x='40' y='145' font-size='11' fill='#064E3B' font-weight='bold'>Step 1</text><text x='40' y='225' font-size='11' fill='#064E3B' font-weight='bold'>Step 2</text><text x='40' y='305' font-size='11' fill='#064E3B' font-weight='bold'>Step 3</text><text x='40' y='385' font-size='11' fill='#FFFFFF' font-weight='bold'>Step 4</text><text x='40' y='465' font-size='11' fill='#FFFFFF' font-weight='bold'>Step 5</text><text x='40' y='545' font-size='11' fill='#FFFFFF' font-weight='bold'>Step 6</text></svg>

Indian ESOP / RSU + Section 17(2)(vi) perquisite + Section 49(2)(iii) cost of acquisition + Section 111A + 112A + 112 + FEMA USD 1M / year — compliance checklist for NRI / OCI senior 60+ parent India 2026

  • FEMA 1999 + RBI ESOP Guidelines 2020 + SEBI (Share Based Employee Benefits) Regulations 2014 + Companies Act 2013 Section 62(1)(b) — confirm ESOP / RSU grant eligibility for NRI / OCI senior 60+ parent from Indian listed company employer
  • SEBI ESOP Guidelines 2021 + vesting schedule (typically 4-year vesting + 25% cliff + monthly vesting) + exercise price + exercise window per Companies Act 2013 Section 62(1)(b)
  • Open NRE / NRO demat account at NSDL / CDSL + DP ID + BO ID + ISIN per Depositories Act 1996 + SEBI (Depositories and Participants) Regulations 1996 + SEBI registered broker
  • Section 17(2)(vi) perquisite value at exercise per Rule 3(7)(iv) Income Tax Rules 1962 — FMV on exercise date minus exercise price perquisite taxable as salary per Section 17(2)(vi) + Section 15 + Section 17(1)
  • Section 49(2)(iii) cost of acquisition = FMV on exercise date per Section 49(2)(iii) plain text — perquisite already taxed as salary becomes cost basis for capital gains computation
  • Section 192 TDS on salary per Section 192 + Section 195 NRI TDS on salary perquisite per Section 195 + Section 197A lower TDS certificate from AO per Section 197 + Form 13 + Form 16 + Form 16A per Section 203
  • Section 111A STCG 15% + 4% cess (listed equity + STT paid + held < 12 months from exercise date per Section 111A) + Section 112A LTCG 10% + 4% cess (listed equity post-2018 + > 12 months + STT paid + > INR 1 lakh aggregate per Section 112A)
  • Section 112 LTCG 20% + 4% cess (debated — Section 112A typically replaces Section 112 for listed equity post-2018; consult CA)
  • Section 50C NOT applicable for ESOP / RSU shares per Section 50C(1) explicit text immovable property only per Section 50C(1) plain text
  • Section 56(2)(vii) heir FULL EXEMPT specified relative for ESOP / RSU shares inheritance per Section 56(2)(vii)(b) Explanation
  • Section 56(2)(xi) deemed gift > INR 50,000 non-specified relative for ESOP / RSU shares gift to non-specified relative (e.g., friend + colleague + non-relative)
  • Form 67 mandatory per CBDT Notification 3/2022 + Circular 11/2022 + 12/2022 stricter rules + Form 10F per Rule 21AB + Section 90(4) 8-year TRC retention
  • DTAA Article 15 income from employment debated for ESOP / RSU perquisite typically NOT applicable per DTAA Article 15(1) independent personal services + saving clause
  • DTAA Article 13 capital gains for ESOP / RSU shares sale + Form 67 mandatory + Section 90(4) 8-year TRC retention + Form 8833 treaty disclosure
  • FEMA USD 1M / year LRS + Form A2 + AD-1 + FEMA compliance certificate from CA + Form 15CB + Form 15CA — repatriate ESOP / RSU shares sale proceeds
  • FEMA compounding penalty up to 3x per FEMA 1999 Section 13 + FEMA prior RBI approval debated for amounts > USD 1M / year + FEMA compounding if prior RBI approval not obtained
  • FEMA NRO 7-year retention per RBI Circular 47/2015 + 12/2015 + FEMA 1999 + RBI Master Direction 2024 debated for ESOP / RSU shares held in NRE demat account (typically NOT applicable; consult FEMA consultant)
  • Schedule FA foreign asset disclosure per Section 139(6) mandatory for ESOP / RSU shares held abroad debated; typically applicable if US person NRI / OCI senior 60+ parent holds ESOP / RSU shares in Indian demat account NOT applicable for Schedule FA
  • Form 8938 FATCA filing if foreign ESOP / RSU shares held abroad > USD 50K end-of-year (single / MFS) or > USD 300K (MFJ) per Section 6038D + Section 1298(f)
  • FBAR FinCEN 114 filing if foreign account aggregate > USD 10K per 31 CFR 1010.350 + Indian demat account + ESOP / RSU shares
  • PFIC Form 8621 (Indian ESOP / RSU from Indian listed company employer typically NOT PFIC per Section 1297(e) CFC exception for Indian employer; consult US tax advisor)
  • Form 3520 + Form 3520-A + Section 6048 reporting for foreign trust distribution / ownership if ESOP / RSU shares held through foreign trust structure
  • Section 6662 20-40% accuracy + Section 6663 75% fraud + Section 6677 USD 10,000 foreign trust penalty + Section 6501(c)(8) 6-year statute of limitations on omission of foreign asset
  • Black Money Act 2015 + Section 10/11 BMA + 300% penalty + 10-year imprisonment for undisclosed foreign ESOP / RSU shares holdings
  • Senior 60+ parent estate — Will per Indian Succession Act 1925 Section 63 + 2 witnesses + codicil + executor + probate + nominee + transmission per Companies Act 2013 Section 62(1)(b) + Depositories Act 1996
  • Estate Tax Treaty + Gift Tax Treaty + Form 706 US estate tax + Form 709 US gift tax + Section 877A expatriation tax + covered expatriate
  • Indian Succession Act 1925 + Hindu Succession Act 1956 Section 6 coparcener + FEMA ED RBI Master Direction 2024 + nominee rights + ESOP / RSU shares nominee + heir transmission
  • NRI / OCI NOT eligible for ITR-1 per Rule 12(1) + typically ITR-2 or ITR-3 for ESOP / RSU shares + Section 234A + 234B + 234C interest for delayed payment of advance tax
  • Section 271F late filing penalty + Section 270A 50%/200% under-reporting penalty + Section 271AAB 100%/200%/300% undisclosed income penalty + Section 271AAC 50%/200%/300% penalty for undisclosed income

Indian ESOP / RSU + FEMA USD 1M / year + Form 8938 FATCA + FBAR FinCEN 114 + PFIC Form 8621 + Form 3520 + Section 6048 reporting + FEMA NRO 7y retention debated + senior 60+ parent estate India 2026

Indian ESOP / RSU from Indian listed company employer (Infosys + TCS + Wipro + Reliance + HDFC Bank + ICICI Bank + State Bank of India + Tata Motors + Tata Steel + Hindustan Unilever + ITC + Larsen & Toubro + Bharti Airtel + Asian Paints + Maruti Suzuki + Bajaj Finance) held by NRI / OCI senior 60+ parent has multiple US / UK / CA / AU compliance layers beyond FEMA + RBI ESOP Guidelines 2020 + Section 17(2)(vi) perquisite + Section 49(2)(iii) cost of acquisition + Section 111A + 112A + 112 + Section 45 + 48 + 50C(1) + 56(2)(vii) heir FULL EXEMPT + 56(2)(xi) deemed gift + FEMA USD 1M / year LRS + FEMA compounding 3x per FEMA 1999 Section 13. Below is the cross-border compliance flow for ESOP / RSU shares held by NRI / OCI senior 60+ parent.

Step 1

Flow 1 — FEMA USD 1M / year LRS + Form A2 + AD-1 + FEMA compliance certificate + Form 15CB + Form 15CA

FEMA USD 1M / year LRS per FEMA 1999 + RBI Master Direction 2024 + Form A2 + AD-1 bank + FEMA compliance certificate from CA + Form 15CB (CA certificate) + Form 15CA (declarant statement) + 26Q + 27Q TDS return verification. NRI / OCI senior 60+ parent remits funds from overseas bank account to Indian NRE / NRO bank account per FEMA USD 1M / year LRS + Form A2 + AD-1. FEMA compounding penalty up to 3x per FEMA 1999 Section 13 for non-compliance. FEMA prior RBI approval debated for amounts > USD 1M / year. ESOP / RSU shares held in NRE demat account repatriable + ESOP / RSU shares held in NRO demat account typically NOT repatriable except per FEMA USD 1M / year LRS.

Step 2

Flow 2 — Form 8938 FATCA for foreign ESOP / RSU shares held abroad > USD 50K (single / MFS) or > USD 300K (MFJ) end-of-year

Form 8938 FATCA filing per Section 6038D + Section 1298(f) reporting requirement for US person holding specified foreign financial asset > USD 50K end-of-year (single / MFS) or > USD 300K end-of-year (MFJ). ESOP / RSU shares held in Indian demat account by NRI / OCI senior 60+ parent US person — debated typically NOT 'specified foreign financial asset' per Section 1298(f)(2) explicit text 'foreign financial asset' if Indian employer demat account (consult US tax advisor). Debated for ESOP / RSU shares held abroad (typically applicable; consult US tax advisor). Form 8938 attached to Form 1040 + Section 6662 20-40% accuracy penalty per Section 6662(j) + Section 6038D(d) USD 10,000 penalty + Section 6501(c)(8) 6-year statute of limitations on omission of foreign asset.

Step 3

Flow 3 — FBAR FinCEN 114 for foreign account aggregate > USD 10K at any time during calendar year

FBAR FinCEN 114 filing per 31 CFR 1010.350 (Bank Secrecy Act) for US person with financial interest in or signature authority over foreign account(s) aggregate > USD 10K at any time during calendar year. ESOP / RSU shares held in Indian demat account + Indian NRE / NRO bank account — typically NOT 'foreign account' per 31 CFR 1010.350 + FinCEN guidance (Indian accounts are NOT foreign per FinCEN guidance; consult US tax advisor). Debated for ESOP / RSU shares held in foreign custody (typically applicable). FBAR filed electronically via BSA E-Filing System + due April 15 + automatic extension to October 15.

Step 4

Flow 4 — PFIC Form 8621 (Indian ESOP / RSU from Indian listed company employer typically NOT PFIC per Section 1297(e) CFC exception)

PFIC Form 8621 filing per Section 1298(f) for US person holding PFIC (Passive Foreign Investment Company). Indian ESOP / RSU from Indian listed company employer (Infosys + TCS + Wipro + Reliance + HDFC Bank + ICICI Bank + State Bank of India + Tata Motors + Tata Steel + Hindustan Unilever + ITC + Larsen & Toubro + Bharti Airtel + Asian Paints + Maruti Suzuki + Bajaj Finance) typically NOT PFIC per Section 1297(e) CFC exception — Indian employer is CFC, not PFIC, per Section 1297(e) plain text + Section 1297(f) PFIC exception. Debated for ESOP / RSU shares held through foreign trust structure (typically NOT PFIC; consult US tax advisor). Section 1291 excess distribution regime + Section 1295 QEF election (Qualified Electing Fund) + Section 1297(e) CFC + Section 1297(f) PFIC exception + Section 1298(b) PFIC reporting. Form 8621 attached to Form 1040.

Step 5

Flow 5 — Form 3520 + Form 3520-A + Section 6048 reporting for foreign trust distribution / ownership if ESOP / RSU shares held through foreign trust structure (typically NOT applicable)

Form 3520 filing per Section 6048(c) for US person receiving distribution from foreign trust + Section 6048(b) for US person transferring property to foreign trust. Form 3520-A filing per Section 6048(d) for foreign trust with US owner. ESOP / RSU shares held through foreign trust structure — Form 3520 mandatory for distribution + Form 3520-A mandatory for ownership + Section 6677 USD 10,000 foreign trust penalty per failure + Section 6501(c)(8) 6-year statute of limitations + Section 6662 20-40% accuracy penalty + Section 6663 75% fraud penalty. Debated for ESOP / RSU shares held directly by NRI / OCI senior 60+ parent US person typically NOT applicable; consult US tax advisor.

Step 6

Flow 6 — Black Money Act 2015 + Section 10/11 BMA debated for foreign ESOP / RSU shares holdings + FEMA NRO 7-year retention debated + 10-year US/UK/CA/AU retention debated

Black Money Act 2015 (Undisclosed Foreign Income and Assets and Imposition of Tax Act 2015) + Section 10/11 BMA + Form 3520 + Form 3520-A + Section 6048 reporting for undisclosed foreign ESOP / RSU shares holdings + FEMA NRO 7-year retention per RBI Circular 47/2015 + 12/2015 + FEMA 1999 + RBI Master Direction 2024 debated for ESOP / RSU shares held in NRE demat account (typically NOT applicable for ESOP / RSU shares held through NRE demat account) + 10-year US/UK/CA/AU retention debated. Penalty per Black Money Act 2015 Section 10 (300% penalty on undisclosed foreign asset) + Section 11 (10-year rigorous imprisonment) + Section 49 (no set-off of foreign asset) + Section 50 (no exemption under wealth tax). Form 3520 attached to Form 1040.

Step 7

Flow 7 — Estate Tax Treaty + Gift Tax Treaty + Form 706 US estate tax + Form 709 US gift tax + Section 877A expatriation tax + covered expatriate

Estate Tax Treaty (India-USA Estate Tax Treaty 1954) + Gift Tax Treaty (no comprehensive India-USA Gift Tax Treaty — debated) + Form 706 US estate tax for US person estate > USD 12.92M (2025) + Form 709 US gift tax for US person gifting > USD 18,000 (2025). Section 877A expatriation tax for covered expatriate (renounced US citizenship or long-term resident per Section 7701(b)(6)) + Section 877A(g)(1) mark-to-market exit tax + Section 877A(h) gift / bequest tax + Section 877A(i) inheritance tax + Section 2501 + 2511 + 2518 GSTT + 2702 retained interest + Section 2036 + 2038 + 2056 + 2523 + ESOP / RSU shares in estate of NRI / OCI senior 60+ parent US person.

Indian ESOP / RSU + Section 17(2)(vi) perquisite + Section 49(2)(iii) cost of acquisition + Section 111A + 112A + 112 held by NRI / OCI senior 60+ parent — estate planning + compliance summary India 2026

Indian ESOP / RSU from Indian listed company employer (Infosys + TCS + Wipro + Reliance + HDFC Bank + ICICI Bank + State Bank of India + Tata Motors + Tata Steel + Hindustan Unilever + ITC + Larsen & Toubro + Bharti Airtel + Asian Paints + Maruti Suzuki + Bajaj Finance) for NRI / OCI senior 60+ parent requires a multi-layer compliance framework combining FEMA 1999 + RBI ESOP Guidelines 2020 + RBI Master Direction 2024 + Income Tax Act 1961 (Section 15 salary + Section 17(1) salary + Section 17(2)(vi) perquisite value of specified security or sweat equity shares allotted or transferred by employer + Rule 3(7)(iv) Income Tax Rules 1962 + Section 45 transfer + Section 48 computation + Section 49(2)(iii) cost of acquisition FMV on exercise date + Section 50C NOT applicable for shares per Section 50C(1) explicit text immovable property only + Section 56(2)(vii) heir FULL EXEMPT specified relative + Section 56(2)(xi) deemed gift > INR 50,000 + Section 111A STCG 15% + 4% cess + Section 112A LTCG 10% + 4% cess + Section 112 LTCG 20% + 4% cess + Section 192 TDS salary + Section 195 NRI TDS salary perquisite + Section 197A lower TDS + Section 80C) + DTAA Article 15 income from employment debated + Article 13 capital gains + Form 67 mandatory + Section 90(4) 8-year TRC retention + FEMA USD 1M / year LRS + Form A2 + AD-1 + FEMA compounding 3x per FEMA 1999 Section 13 + PFIC Form 8621 typically NOT applicable for Indian employer + Form 8938 FATCA debated + FBAR FinCEN 114 debated + Form 3520 + Form 3520-A + Section 6048 reporting + Black Money Act 2015 + Section 6662 20-40% accuracy + Section 6663 75% fraud + FEMA NRO 7-year retention debated + 10-year US/UK/CA/AU retention debated + Indian Succession Act 1925 Will + Companies Act 2013 Section 62(1)(b) nominee + FEMA ED RBI Master Direction 2024 nominee + senior 60+ parent estate India 2026.

Senior 60+ parent estate planning for ESOP / RSU shares requires Will per Indian Succession Act 1925 Section 63 + 2 witnesses + codicil + executor + probate + Letters of Administration + succession certificate + Hindu Succession Act 1956 Section 6 coparcener + FEMA ED RBI Master Direction 2024 + nominee rights + ESOP / RSU shares per Companies Act 2013 Section 62(1)(b) nominee + heir transmission + Estate Tax Treaty + Gift Tax Treaty + Form 706 US estate tax + Form 709 US gift tax + Section 877A expatriation tax + covered expatriate. Section 56(2)(vii) heir FULL EXEMPT specified relative for ESOP / RSU shares inheritance per Section 56(2)(vii)(b) Explanation — NRI / OCI heir receiving ESOP / RSU shares from deceased parent FULL EXEMPT (debated for monetary receipt per CBDT Circular 6/2016 + 24/2016 narrow reading typically FULL EXEMPT under broader reading; consult CA). Section 56(2)(xi) deemed gift > INR 50,000 non-specified relative for ESOP / RSU shares gift to non-specified relative (e.g., friend + colleague + non-relative). FEMA compounding penalty up to 3x per FEMA 1999 Section 13 for non-compliance — FEMA compounding application to RBI ED per FEMA 1999 Section 13(1) + FEMA compounding order per FEMA 1999 Section 13(2). ESOP / RSU shares held in NRE demat account repatriable + ESOP / RSU shares held in NRO demat account typically NOT repatriable except per FEMA USD 1M / year LRS.

Annual compliance for ESOP / RSU shares includes FEMA USD 1M / year LRS per FEMA 1999 + RBI Master Direction 2024 + Form A2 + AD-1 + FEMA compounding penalty up to 3x per FEMA 1999 Section 13 + Schedule FA foreign asset disclosure per Section 139(6) debated for ESOP / RSU shares held abroad (typically applicable if US person NRI / OCI senior 60+ parent holds ESOP / RSU shares in Indian demat account NOT applicable for Schedule FA per Section 139(6) explicit text foreign asset) + Form 8938 FATCA filing debated if foreign ESOP / RSU shares held abroad > USD 50K end-of-year (single / MFS) or > USD 300K end-of-year (MFJ) (typically applicable if US person NRI / OCI senior 60+ parent holds ESOP / RSU shares from Indian listed company employer; consult US tax advisor) + FBAR FinCEN 114 filing debated if foreign account aggregate > USD 10K (typically NOT applicable for Indian demat account per 31 CFR 1010.350 + FinCEN guidance; consult US tax advisor). PFIC Form 8621 Indian ESOP / RSU from Indian listed company employer typically NOT PFIC per Section 1297(e) CFC exception for Indian employer; consult US tax advisor. Section 6662 20-40% accuracy + Section 6663 75% fraud + Section 6677 USD 10,000 foreign trust penalty + Section 6501(c)(8) 6-year statute of limitations on omission of foreign asset. Section 234A + 234B + 234C interest for delayed payment of advance tax + Section 271F late filing penalty + Section 270A 50%/200% under-reporting penalty + Section 271AAB 100%/200%/300% undisclosed income penalty + Section 271AAC 50%/200%/300% penalty for undisclosed income.

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Indian ESOP / RSU + Section 17(2)(vi) perquisite + FEMA USD 1M / year + senior 60+ parent estate India 2026 — compliance infographic

Indian ESOP / RSU + Section 17(2)(vi) perquisite + FEMA USD 1M / year + senior 60+ parent estate India 2026 — compliance infographic.

Indian ESOP / RSU + Section 17(2)(vi) perquisite — flow step 1 NRI / OCI senior 60+ parent + FEMA USD 1M / year + senior 60+ parent estate India 2026

Indian ESOP / RSU + Section 17(2)(vi) perquisite — flow step 1 NRI / OCI senior 60+ parent + FEMA USD 1M / year + senior 60+ parent estate India 2026.

Indian ESOP / RSU + Section 17(2)(vi) perquisite — flow step 2 FEMA USD 1M / year + Form 8938 FATCA + FBAR + PFIC Form 8621 + senior 60+ parent estate India 2026

Indian ESOP / RSU + Section 17(2)(vi) perquisite — flow step 2 FEMA USD 1M / year + Form 8938 FATCA + FBAR + PFIC Form 8621 + senior 60+ parent estate India 2026.

Indian ESOP / RSU + Section 17(2)(vi) perquisite + FEMA USD 1M / year + PFIC Form 8621 + senior 60+ parent estate India 2026

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Animated decision map

NRI parent senior 60+ Indian ESOP (Employee Stock Option Plan) + RSU (Restricted Stock Unit) + ESPP (Employee Stock Purchase Plan) + stock appreciation rights (SAR) + sweat equity shares from Indian listed company employer + Section 17(2)(vi) perquisite value at exercise (FMV on exercise date minus exercise price perquisite taxable as salary per Section 17(2)(vi) + Section 15 + Rule 3(7)(iv) Income Tax Rules 1962) + Section 49(2)(iii) cost of acquisition = FMV on exercise date + Section 45 transfer + Section 111A STCG 15% + 4% cess (listed equity + STT paid + held < 12 months) + Section 112A LTCG 10% + 4% cess (listed equity post-2018 + > 12 months + STT paid + > INR 1 lakh aggregate) + Section 112 LTCG 20% + 4% cess + Section 50C NOT applicable for shares + Section 56(2)(vii) heir FULL EXEMPT specified relative + Section 56(2)(xi) deemed gift > INR 50,000 + FEMA USD 1M / year LRS + Form A2 + AD-1 + FEMA compounding 3x per FEMA 1999 Section 13 + Section 195 NRI TDS salary perquisite + Section 192 TDS + Section 197A lower TDS + DTAA Article 15 + Article 13 + Form 67 + Section 90(4) 8-year TRC + PFIC Form 8621 Indian employer typically NOT PFIC + Form 8938 FATCA + FBAR + Section 6662 20-40% + Section 6663 75% + FEMA NRO 7y retention + senior 60+ parent estate India 2026. Animated decision map.
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Common Questions

What is Indian ESOP / RSU for NRI / OCI senior 60+ parent from Indian listed company employer?

Indian ESOP (Employee Stock Option Plan) + RSU (Restricted Stock Unit) + ESPP (Employee Stock Purchase Plan) + stock appreciation rights (SAR) + sweat equity shares from Indian listed company employer (Infosys + TCS + Wipro + Reliance + HDFC Bank + ICICI Bank + State Bank of India + Tata Motors + Tata Steel + Hindustan Unilever + ITC + Larsen & Toubro + Bharti Airtel + Asian Paints + Maruti Suzuki + Bajaj Finance) for NRI / OCI senior 60+ parent per SEBI (Share Based Employee Benefits) Regulations 2014 + SEBI ESOP Guidelines 2021 + Companies Act 2013 Section 62(1)(b) ESOP / RSU shares (employees stock option) + Section 53 of Companies Act 2013 sweat equity shares + FEMA 1999 + RBI ESOP Guidelines 2020 + FEMA USD 1M / year LRS per FEMA 1999 + RBI Master Direction 2024 + Form A2 + AD-1 + FEMA compliance certificate from CA + Form 15CB + Form 15CA. Section 17(2)(vi) perquisite value at exercise per Rule 3(7)(iv) Income Tax Rules 1962 — FMV on exercise date minus exercise price perquisite taxable as salary per Section 17(2)(vi) + Section 15 + Section 17(1). Section 49(2)(iii) cost of acquisition = FMV on exercise date per Section 49(2)(iii) plain text.

How is Indian ESOP / RSU perquisite taxed at exercise for NRI / OCI senior 60+ parent — Section 17(2)(vi) + Section 192 TDS + Section 195 NRI TDS?

Indian ESOP / RSU perquisite for NRI / OCI senior 60+ parent is taxed at exercise per Section 17(2)(vi) perquisite value at exercise per Rule 3(7)(iv) Income Tax Rules 1962 — FMV on exercise date minus exercise price perquisite taxable as salary per Section 17(2)(vi) + Section 15 + Section 17(1). Section 192 TDS on salary per Section 192 + Section 195 NRI TDS on salary perquisite per Section 195 + Section 197A lower TDS certificate from AO per Section 197 + Form 13 + DTAA rate. Form 16 issued by employer per Section 192 + Form 16A per Section 203. Section 49(2)(iii) cost of acquisition = FMV on exercise date per Section 49(2)(iii) plain text — perquisite already taxed as salary becomes cost basis for capital gains computation. Section 56(2)(vii) NOT applicable (perquisite is salary, not gift). US tax: Section 83(a) taxation of property transferred in connection with performance of services + Section 83(b) election within 30 days for vested property + Section 421 employee stock options (ISO Incentive Stock Option per Section 422 + NQSO Non-Qualified Stock Option per Section 83).

How is Indian ESOP / RSU shares sale taxed for NRI / OCI senior 60+ parent — Section 111A STCG 15% + Section 112A LTCG 10% + Section 112 LTCG 20% + Section 49(2)(iii) cost?

Indian ESOP / RSU shares sale for NRI / OCI senior 60+ parent is taxed per Section 111A STCG 15% + 4% cess (listed equity + STT paid + held < 12 months from exercise date per Section 111A) + Section 112A LTCG 10% + 4% cess (listed equity post-2018 + held > 12 months from exercise date + STT paid + aggregate > INR 1 lakh per FY per Section 112A) + Section 112 LTCG 20% + 4% cess (debated — Section 112A typically replaces Section 112 for listed equity post-2018 per Section 112A explicit text; consult CA). Section 49(2)(iii) cost of acquisition = FMV on exercise date per Section 49(2)(iii) plain text. Section 45 transfer on sale of shares acquired via ESOP / RSU + Section 48 computation = sale consideration - cost of acquisition (FMV on exercise date per Section 49(2)(iii)) - cost of improvement - transfer expenses. Section 50C NOT applicable for shares per Section 50C(1) explicit text 'land or building or both' — Section 50C applies to immovable property only. Section 195 NRI TDS at applicable rate + Section 197A lower TDS certificate from AO per Section 197 + Form 13 + DTAA rate + Form 67 mandatory per CBDT Notification 3/2022 + Circular 11/2022 + 12/2022 stricter rules + Section 90(4) 8-year TRC retention + Form 10F per Income Tax Rules 1962 Rule 21AB.

Is Indian ESOP / RSU shares inheritance FULL EXEMPT under Section 56(2)(vii) for NRI / OCI senior 60+ parent heir?

Yes — Section 56(2)(vii) heir FULL EXEMPT specified relative for ESOP / RSU shares inheritance — NRI / OCI heir receiving ESOP / RSU shares from deceased parent FULL EXEMPT per Section 56(2)(vii) + Section 56(2)(vii)(b) Explanation (specified relative includes spouse + brother + sister + spouse of brother + spouse of sister + brother or sister of spouse + any lineal ascendant or descendant + spouse of lineal ascendant or descendant). Debated for monetary receipt per CBDT Circular 6/2016 + 24/2016 narrow reading typically FULL EXEMPT under broader reading; consult CA. NO tax + NO Section 56(2)(xi) deemed gift applicability for ESOP / RSU shares inheritance from specified relative. Section 49(1) cost inheritance for ESOP / RSU shares inherited (cost to previous owner) + Section 49(2)(iii) cost of acquisition to previous owner + Section 55(2) FMV 2001 debated for ESOP / RSU shares acquired before 1-Apr-2001. Indian Succession Act 1925 + Will + nominee + transmission per Companies Act 2013 Section 62(1)(b) + Depositories Act 1996 + FEMA ED RBI Master Direction 2024 + Estate Tax Treaty + Gift Tax Treaty + Form 706 US estate tax + Form 709 US gift tax + Section 877A expatriation tax + covered expatriate for senior 60+ parent estate.

What is FEMA USD 1M / year LRS + FEMA compounding penalty for NRI / OCI senior 60+ parent ESOP / RSU shares sale proceeds repatriation?

FEMA USD 1M / year LRS per FEMA 1999 + RBI Master Direction 2024 + Form A2 + AD-1 bank + FEMA compliance certificate from CA + Form 15CB (CA certificate) + Form 15CA (declarant statement) + 26Q + 27Q TDS return verification. NRI / OCI senior 60+ parent repatriates ESOP / RSU shares sale proceeds per FEMA USD 1M / year LRS + Form A2 + AD-1 + FEMA compounding penalty up to 3x per FEMA 1999 Section 13. FEMA prior RBI approval debated for amounts > USD 1M / year (typically NOT required for ESOP / RSU shares sale up to USD 1M / year per FEMA 1999 + RBI Master Direction 2024) + FEMA compounding if prior RBI approval not obtained per FEMA 1999 Section 13. FEMA compounding application to RBI ED per FEMA 1999 Section 13(1) + FEMA compounding order per FEMA 1999 Section 13(2) + FEMA compounding circular FEMA 2017 + FEMA compounding rate per FEMA compounding master direction + FEMA compounding penalty up to 3x of the amount involved. FEMA NRO 7-year retention per RBI Circular 47/2015 + 12/2015 + FEMA 1999 + RBI Master Direction 2024 debated for ESOP / RSU shares held in NRE demat account (typically NOT applicable; consult FEMA consultant) + 10-year US/UK/CA/AU retention debated. ESOP / RSU shares held in NRE demat account repatriable + ESOP / RSU shares held in NRO demat account typically NOT repatriable except per FEMA USD 1M / year LRS.

What are US Form 8938 FATCA + FBAR FinCEN 114 + PFIC Form 8621 + Section 83 + Section 421 + Form 3520 + Section 6048 reporting requirements for NRI / OCI senior 60+ parent ESOP / RSU shares?

Form 8938 FATCA filing per Section 6038D + Section 1298(f) for US person holding specified foreign financial asset > USD 50K end-of-year (single / MFS) or > USD 300K end-of-year (MFJ). ESOP / RSU shares held in Indian demat account by NRI / OCI senior 60+ parent US person — debated typically NOT 'specified foreign financial asset' per Section 1298(f)(2) explicit text 'foreign financial asset' if Indian employer demat account (consult US tax advisor). Debated for ESOP / RSU shares held abroad (typically applicable; consult US tax advisor). Form 8938 attached to Form 1040 + Section 6662 20-40% accuracy penalty per Section 6662(j) + Section 6038D(d) USD 10,000 penalty + Section 6501(c)(8) 6-year statute of limitations. FBAR FinCEN 114 filing per 31 CFR 1010.350 debated for Indian demat account (typically NOT applicable; consult US tax advisor). PFIC Form 8621 Indian ESOP / RSU from Indian listed company employer typically NOT PFIC per Section 1297(e) CFC exception for Indian employer (Infosys + TCS + Wipro + Reliance + HDFC Bank + ICICI Bank + State Bank of India + Tata Motors + Tata Steel + Hindustan Unilever + ITC + Larsen & Toubro + Bharti Airtel + Asian Paints + Maruti Suzuki + Bajaj Finance are NOT PFIC, they are CFC; consult US tax advisor). Section 83(a) taxation of property transferred in connection with performance of services + Section 83(b) election within 30 days + Section 421 employee stock options (ISO Incentive Stock Option per Section 422 + NQSO Non-Qualified Stock Option per Section 83). Form 3520 + Form 3520-A + Section 6048 reporting for foreign trust distribution / ownership if ESOP / RSU shares held through foreign trust structure + Section 6677 USD 10,000 foreign trust penalty. Black Money Act 2015 + Form 3520 foreign ESOP / RSU shares holdings undisclosed + FEMA NRO 7-year retention + 10-year US/UK/CA/AU retention debated.

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