RSU cost basis for Indian tax: which number to use and where to find it

You sold some RSU shares in FY 2025-26. Your CA asked for "the cost basis." You opened your broker statement and saw four candidates:

• A column called "Cost Basis": $0.00
• A column called "Adjusted Cost Basis": $185.40 per share
• A number your employer's payroll team gave you as "vest-date FMV": ₹15,452 per share
• The "purchase price" in the grant agreement: $0 (RSUs are granted, not purchased)

Which one? The answer is specific and the stakes are real — using the wrong one either causes you to overpay tax (using zero cost basis) or underpay (using grant date or some other basis).

The three numbers that exist — and which one India needs

Every RSU holder encounters these three numbers at some point:

The vest-date FMV in INR is the correct cost basis. It is both the amount that was taxed as perquisite and the amount you paid to "acquire" the shares in economic terms.

The answer first

For Indian RSU capital gains tax, the cost basis is:

The fair market value (FMV) of the shares on the vest date, converted to INR using SBI TTBR on the vest date.

This is the same value that was added to your salary as a perquisite (Section 17(2) of the Income Tax Act). The logic: you were already taxed on this amount as income when the shares vested. Using it as your cost basis prevents double taxation — you pay capital gains tax only on the appreciation after vest, not on the amount already taxed as salary.

Why this matters: the double-tax trap

Suppose 10 shares vest at $200/share. The perquisite is $2,000 (₹1,66,000 at ₹83.00 TTBR). You're taxed on ₹1,66,000 as salary.

Six months later you sell at $220/share. Sale proceeds: $2,200 (₹1,83,040 at ₹83.20 TTBR).

If cost basis = $0 (wrong): Capital gain = ₹1,83,040 − ₹0 = ₹1,83,040. You pay STCG tax on ₹1,83,040. But ₹1,66,000 of that was already taxed as salary. You're taxed twice on ₹1,66,000.

If cost basis = vest-date FMV in INR (correct): Capital gain = ₹1,83,040 − ₹1,66,000 = ₹17,040. You pay STCG only on the post-vest appreciation. No double taxation.

The difference in tax: at a 30% slab rate, ₹1,66,000 × 30% = ₹49,800 of excess tax if you use zero cost basis. For a large RSU grant, this error costs lakhs.

The vest-date TTBR formula precisely

The SBI TTBR (Telegraphic Transfer Buying Rate) is the exchange rate at which SBI buys USD from a customer — which is the relevant rate for an Indian resident converting foreign-currency income to INR for tax purposes.

Formula: Cost basis (INR) = Number of shares × USD FMV per share × SBI TTBR on vest date

Where to get the TTBR:

• SBI website → Forex Rates → Historical Rates (available by date)
• RBI DBIE (Database on Indian Economy) → Exchange Rates → Historical daily rates
• Your employer's payroll team should have used this rate; ask for the rate they applied if you're verifying

Why the buying rate, not the selling rate? The buying rate is what the bank pays you for your USD. When you receive income in USD (RSU vested = USD-denominated income received), you are effectively "selling" your USD to get INR — the bank is "buying" your USD. Hence the Buying Rate.

For RSU cost basis, the buying rate is consistently what Income Tax Rules specify for converting foreign-currency consideration into INR. The selling rate is used when you pay money in foreign currency.

What to do if your broker shows the wrong cost basis

Brokers sometimes show cost basis in their statements that does not match the vest-date FMV. Common reasons:

1. Cost basis = $0: The broker's system shows the cost basis before the "W-2 income" adjustment. Some US brokers show the pre-adjustment basis for technical reasons. For Indian tax, always use vest-date FMV regardless.

2. Cost basis = adjusted but in USD: The adjusted cost basis (vest-date FMV) is in USD. You must convert it to INR at the SBI TTBR on the vest date — not at today's rate, not at the sale date rate.

3. Cost basis averaged across lots: Some brokers show an average cost basis across multiple vest lots. This is not useful for lot-by-lot Indian capital gains. Rebuild the per-lot basis from the vest activity records.

4. Incorrect FMV: Rare but possible if the broker used a VWAP or opening price rather than closing price. Check your plan document — it specifies how FMV is determined (usually closing price on the vest date).

Corrective action: If the broker shows a wrong cost basis, do not rely on their statement for Indian filing. Go to the vest activity records (see broker-specific instructions below) and compute the correct INR cost basis yourself.

ESPP cost basis vs RSU cost basis: different rules

ESPP (Employee Stock Purchase Plan) shares have a different cost basis treatment than RSUs:

For ESPP shares, the perquisite is the discount received at purchase (e.g., if you buy at 85% of market price, the 15% discount is the perquisite, taxed as salary). The cost basis for subsequent capital gains is the full purchase price (not 85%, but the price you effectively paid including the taxed discount — i.e., the FMV at purchase date).

If you have both RSU and ESPP shares in your brokerage, keep separate lot tables — the basis computation rules differ.

Where to find the correct cost basis in each broker

Morgan Stanley StockPlan Connect

Navigate to: Activity → filter by "Vest"

The correct field is the "Total Amount" on the Vest row — not the "Cost Basis" column (which may show $0 or an adjusted number depending on statement format).

For each lot:

• Vest Date: the "Activity Date" on the Vest row
• USD cost basis per share: Total Amount ÷ Quantity (= share price on vest date)
• INR cost basis per share: USD cost basis × SBI TTBR on the Activity Date

Cross-check: the "Cost Basis" column on a sale row should match this if the statement format shows adjusted basis (vest-date FMV). If it shows $0, ignore it and use the Vest row calculation.

Fidelity NetBenefits

Navigate to: Stock Plan → Activity History → filter by "Release"

The correct field is the "Total Market Value" on the Release row (= Quantity Released × Price per Share on Release Date).

Fidelity Positions tab may show an "Average Cost Basis" — this is useful as a sanity check but may average across lots with different vest-date FMVs. For accurate lot-by-lot capital gains, use the Release row's Total Market Value for each lot independently.

E*Trade Stock Plan (Morgan Stanley at Work)

Navigate to: Stock Plan → My Account → Transactions → filter by "RS Release"

The correct field is the "Gross Value" (or "Total Market Value") on the RS Release row.

The Positions tab may show "Cost Basis" per share — for RSUs, this is typically the vest-date FMV (the adjusted US cost basis). Cross-check it against the Gross Value ÷ Quantity from the RS Release row.

Charles Schwab Equity Awards

Navigate to: Equity Awards → Transaction History → Vest

Look for "Vest Value" or "Market Value at Vest" — this is the gross vest amount. For each lot, cost basis = Market Value at Vest ÷ Shares Vested = per-share USD cost basis.

Carta (common for startup RSUs)

Carta typically provides a Tax Lot Report (downloadable as CSV under Portfolio → Tax Lots). The "Cost per Share" column in the Tax Lot Report represents the vest-date FMV. Verify it matches the vest-date share price in the grant documentation.

Building the lot-by-lot cost basis table

If you've had multiple vest events (quarterly vesting is common), build this table before handing off to your CA:

When you sell, match shares sold to specific lots. If your broker uses FIFO (First In, First Out) — the default — the shares sold come from the earliest vest first. Your CA applies the INR cost basis of the earliest lot against the INR sale proceeds to compute the gain.

Lot-by-lot tracking: the holding period impact

Each lot has not only its own cost basis but also its own holding period start date (the vest date). This matters enormously for STCG vs LTCG classification:

If you sold all 100 shares on 15-Jun-2026 and your broker used FIFO, Lots A and B are LTCG (qualifying) and Lots C and D are STCG (slab rate). Your Schedule CG must separate them.

If instead of selling all you could choose which lots to sell, you could sell Lot A (oldest) to get LTCG treatment, and keep Lots C and D until they cross 24 months. Some brokers support specific identification — you specify which lot to sell at the time of sale. Check your broker's settings.

What happens when you transfer between brokers

If you transfer RSU shares from one US broker to another (e.g., Morgan Stanley to Fidelity after leaving a company), the cost basis may or may not transfer:

• ACATS transfer (full transfer in kind): the receiving broker should receive the cost basis from the delivering broker. In practice, for RSU shares, the adjusted cost basis (vest-date FMV) often transfers correctly.
• DRS (Direct Registration System) transfer: cost basis transfer is less reliable. The receiving broker may show cost basis as $0 or "not available."
• What to do if basis doesn't transfer: maintain your own lot-by-lot INR cost basis table (built from vest activity records, as described above). You are not dependent on the broker's cost basis column for Indian tax purposes — you compute it independently.

For Indian ITR-2 purposes, your broker's cost basis column is only a cross-check. The authoritative source is your own computation from vest records + SBI TTBR. If the two don't match, use your computation and document why.

The two conversion rates that confuse people

For RSU capital gains, two different SBI TTBR rates are used:

Using the sale-date TTBR for cost basis (or vice versa) produces the wrong capital gain. The rates differ because the rupee moves between vest and sale.

Example: shares vested on 01-Mar-2025 (TTBR ₹83.20), sold on 15-Jun-2026 (TTBR ₹84.50). The cost basis is at ₹83.20; the sale proceeds are at ₹84.50. The difference in rates itself produces a small exchange rate component in the gain, which is normal and correct.

Worked example: correct vs incorrect cost basis — the tax difference

Setup: 50 shares vested on 01-Apr-2024 at $180/share (SBI TTBR ₹83.50). Sold on 15-Oct-2026 at $210/share (SBI TTBR ₹85.00).

The zero-cost-basis error costs ₹97,695 on this single lot. The wrong-rate error is smaller (₹1,755) but still incorrect — it understates the gain because the rupee depreciated between vest and sale, and using the later (higher) rate for cost basis inflates the INR cost basis, suppressing the gain.

What about shares sold via sell-to-cover?

The automatic sell-to-cover at vest (shares sold by the broker to cover US tax withholding) is not a capital gain event for Indian tax. Here's why:

• The sell-to-cover is executed on the same day as the vest, at the same price (or very close to it)
• The entire gross vest value was already taxed as perquisite income
• There is no holding period or appreciation — it's a same-day disposal at vest-date price

Some CAs include the sell-to-cover as a short-term capital gain of zero (sale price = cost basis). This is technically correct but adds complexity for no tax impact. The more defensible position is to exclude it entirely and document why: the sell-to-cover is part of the vest event, not a separate capital event.

Checklist before handing to your CA

• Vest-date FMV in USD for each lot (from broker's vest/release activity rows)
• SBI TTBR for each vest date (from SBI historical TTBR table)
• INR cost basis per lot = USD FMV × TTBR (compute this, not your CA)
• Sale date and sale proceeds in USD
• SBI TTBR for sale date
• INR sale proceeds = USD proceeds × TTBR
• Lot matching: which lots were sold (FIFO or specific identification)
• Holding period per lot: vest date to sale date (< 24 months = STCG at slab; ≥ 24 months = LTCG at 12.5%)
• ESPP lots tracked separately with their own purchase-date cost basis
• Post-transfer lots verified against original vest records if broker changed