RSU and ESPP Tax in India: Which Exchange Rate to Use for Perquisite Value and Capital Gains

If your employer is a US-listed company, your RSUs and ESPP shares create two taxable events in India: a salary perquisite when the shares vest or are purchased, and a capital gain when you sell them. Both are denominated in dollars, so both need a rupee conversion, and the Income-tax Rules prescribe which rate and which date. Get the date wrong and your Form 16, your ITR and your broker statements stop reconciling. This guide sets out the rule for each event with worked numbers.

The rule: SBI TT buying rate on a specified date

Rule 115 of the Income-tax Rules, 1962 converts any income expressed in foreign currency at the telegraphic transfer buying rate of the State Bank of India on a specified date. The specified date depends on the head of income. The two heads that matter for equity compensation:

Note the pattern: the rate is never the rate on the event date itself. It is always the previous month-end. A vesting on 15 August uses the SBI TT buying rate of 31 July.

Event 1: vesting, taxed as salary

Rule 3(8) values the perquisite at the fair market value on the vesting or exercise date (for listed foreign shares, the closing price on the exchange) less anything you paid. Your employer converts that dollar figure into rupees, adds it to your salary, and deducts TDS. The employer should use the Rule 115 date; check Form 12BA, because payroll systems sometimes use the vesting-day rate or the rate at which shares were sold to cover tax.

Worked example. 100 RSUs vest on 15 August 2026 at a closing price of USD 150. The perquisite is USD 15,000. The specified date is 31 July 2026. Suppose SBI's TT buying rate for USD on that day was 93.20. The perquisite is ₹13,98,000. If payroll used the vesting-day rate of, say, 93.60, Form 16 would show ₹14,04,000, a 0.4% difference that compounds into a cost-of-acquisition mismatch later.

Event 2: sale, taxed as capital gains

When you sell, the gain is sale consideration minus cost of acquisition. Section 49(2AA) sets the cost of acquisition at the FMV that was taxed as a perquisite, so the dollar cost is USD 150 per share from the example above. Rule 115 converts the whole computation at the SBI TT buying rate on the last day of the month before the sale month. One rate, both legs.

Worked example. You sell the 100 shares on 20 March 2027 at USD 190. The specified date is 28 February 2027; suppose the rate is 95.10.

Two consequences people miss. First, the rupee cost here (₹14,26,500) is not the perquisite you paid tax on (₹13,98,000); the difference is currency movement and it is taxed as part of the gain. Second, the holding period runs from the vesting date; foreign listed shares are long-term after 24 months, so this sale is a long-term gain. Shares sold within 24 months of vesting are short-term.

ESPP: same two events

For an ESPP the perquisite is the FMV on the purchase date minus the discounted price you paid, converted at the salary rate date (the month-end before the purchase month). The cost of acquisition for the later sale is the FMV on the purchase date. The sale follows the capital gains rule above. If your plan has a look-back feature, the discount can be large; the exchange rate rule does not change.

Selling shares to cover tax at vesting

Most plans sell a slice of vested shares immediately to fund withholding. That is a sale on the vesting date and a capital gain in its own right, usually tiny because the sale price and FMV are the same day. It still needs the capital gains rate date (the month-end before the vesting month) and still appears in Schedule CG. The remaining shares carry on with the same cost basis.

Schedule FA and the calendar-year twist

Vested shares held in a foreign broker account must also be disclosed in Schedule FA, which runs on the calendar year and converts values at the SBI TT buying rate on the actual acquisition, peak and 31 December dates. So the same vesting produces a third rupee number, the Schedule FA initial value at the vesting-day rate. The three figures legitimately differ. The Schedule FA exchange rate guide covers that schedule in detail.

Fetching the SBI TT buying rate

SBI publishes its card rate as a PDF that is replaced daily. For the current board as JSON:

curl "https://allratestoday.com/api/open/bank-rates/in/sbi?ccy=USD"
# { "bank": "sbi", "bank_updated_at": "09-11-2026 Time 1:08 PM",
#   "buy": 93.6, "sell": 94.45, "mid": 94.025, ... }

The buy field is the TT buying rate. Add &date=YYYY-MM-DD for a stored past day (snapshots are kept from October 2026). For month-ends before that, use SBI's own sheet saved on the day or a community archive of SBI card rates. A one-line scheduled job that stores the board on the last business day of each month covers every Rule 115 date you will ever need.

As a cross-check, the RBI reference rate for the same dates is on the RBI exchange rate API; it runs about 0.2% to 0.4% above the SBI TT buying rate.

FAQ

Which exchange rate applies to RSU perquisite value in India?

The perquisite is salary, so Rule 115 applies: the SBI telegraphic transfer buying rate on the last day of the month immediately before the month in which the RSUs vested. The fair market value on the vesting date is converted at that rate.

Which exchange rate applies when I sell the shares?

The sale is a capital gain, so Rule 115 points to the SBI TT buying rate on the last day of the month immediately before the month of sale. Both the sale proceeds and the cost of acquisition are converted at that same rate, because the proviso to Rule 115 applies one rate to the whole computation.

Is the cost of acquisition the perquisite value?

Yes. Under section 49(2AA) the cost of acquisition of shares taxed as a perquisite is the fair market value that was taxed. For the capital gains computation that dollar FMV is converted at the capital gains rate date, not at the rate used for the salary perquisite.

Do ESPP shares follow the same rules?

Yes. The discount between the fair market value on the exercise or purchase date and the price you paid is a perquisite converted at the salary rate date; the later sale is a capital gain converted at the capital gains rate date.

Does the RBI reference rate ever apply to RSUs?

Not for income tax. Rule 115 names the SBI TT buying rate. The RBI reference rate is useful as a cross-check and for FEMA-side reporting such as the LRS and Schedule FA sanity checks, but it is not the prescribed rate.