Your RSUs vested in San Francisco, but you worked two of the four vesting years in Bengaluru. India taxes that slice.

The taxable event is vesting for an RSU and exercise for an ESOP. On that date the share value becomes taxable as a salary perquisite under Section 17(2), in the country, or countries, entitled to tax it.

Here is the part almost everyone gets wrong. The instinct is 'it vested while I was in San Francisco, so the US taxes it', or 'I left India two years ago, so India cannot touch it'. Both are usually wrong.

Equity comp is employment income, and employment income is sourced to where you actually worked while you earned it, across the grant-to-vest period, not where you happened to be on the vesting day. Work two of a four-year vesting period in India and India sources half the vest; your foreign country sources the other half. Both can tax their slice. This days-of-service split is the single most-missed mechanic in cross-border equity, and it rests on a consistent line of tribunal decisions and the OECD commentary on Article 15, not on any single circular.

Say you joined the Indian arm of a US tech company in January 2022 with 400 RSUs vesting 100 a year over four years, and you moved to the US in January 2024.

Indian practice measures each tranche over its own grant-to-vest window. So the tranche that vested in January 2024 was earned over the prior year you spent in India: India taxes all of it, even though it vested the week you landed in San Francisco. The tranches vesting in 2025 and 2026 were earned entirely in the US, so India's claim on those is zero.

If a grant instead carries a single cumulative service condition, the split is fractional and the day-count gets technical. Get a written confirmation from your stock plan administrator on whether your vests are treated tranche by tranche or cumulatively, and apply the source split to match.

If you were on an Indian payroll at vesting, the Indian employer values the perquisite (share price on the vest date, less anything you paid) and withholds TDS on it under Section 192. It shows up in your Form 16, taxed at your slab rate as salary.

Startups get one concession. An eligible startup can defer the TDS to the earliest of three points: 48 months from the end of the assessment year in which the shares were allotted, the date you sell the shares, or the date you leave. The tax is deferred, not waived. And the bar is narrow: the startup needs the Section 80-IAC certificate, not just DPIIT recognition. Only about 3,700 of India's roughly 2 lakh recognised startups hold it (DPIIT and PIB figures, 2025), so for most employees the deferral simply does not apply. For shares allotted on or after 1 April 2026 under the Income-tax Act 2025, the deferral window widens to 60 months.

If you left the Indian payroll mid-vesting, the Indian employer usually stops withholding from the date you moved. The Indian-source portion of later vests then becomes yours to declare in your Indian return, even when no Form 16 captures it. The foreign employer, meanwhile, treats the whole vest as local wages and withholds on all of it. That is where the double tax starts.

When both countries tax the same slice, the treaty's foreign tax credit is what nets it out. For India and the US that is Article 25: India gives credit for US tax paid on the US slice, the US gives credit for Indian tax on the India slice, each capped at its own tax on that slice.

On the India side you claim the credit with Form 67, and this is where the old advice is out of date. Form 67 no longer has to be filed before your return. Since the 2022 amendment to Rule 128, you can file it any time up to the end of the relevant assessment year, and it is allowed even with a belated or an updated return. What you cannot do is skip it: without Form 67, India taxes the full Indian-source perquisite with no credit, and unwinding that later means a rectification that drags on for a year or more.

File Form 67 for the year, and do not wait for a notice to remind you.

None of these are exotic. They are the ordinary ones that quietly leave the same money taxed by two departments at once.

There is one clean planning lever for a returning NRI. While you are RNOR, capital gains on your foreign shares are not taxable in India, and that window usually runs two to three years from your return.

So the move is to realise gains on vested foreign shares while you are still RNOR, before you become an ordinary resident. There is no automatic step-up in cost basis when your status changes: the basis stays the vest-date value already taxed as perquisite. Waiting does not reset anything, so the lever is timing the sale, not waiting for an adjustment that never comes.

Cross-border equity is the one area where a generalist return quietly goes wrong: the wrong source split, a missed Form 67, a Schedule FA omission that surfaces as a notice years later. If your vesting straddled India and abroad, or you hold foreign shares, this is worth getting right once.

A CA who does this maps your vesting schedule tranche by tranche, computes the Indian-source slice, files Form 67 against your foreign tax, discloses the shares in Schedule FA, and, if you are returning, times the sale to your RNOR window. That is the difference between paying tax once and paying it twice.