Foreign Asset Reporting for Hyderabad Tech Employees: RSUs, US Accounts and Returnees

Hyderabad has one of India's largest concentrations of employees of US and other multinational technology companies — and a large number of NRIs who have returned from the US. Between them, foreign asset reporting affects tens of thousands of Telangana taxpayers. This guide covers their most common situations.

RSUs in US Brokerage Accounts

Employees of US-headquartered companies typically receive RSUs that vest into a brokerage account in the US. As residents who are ordinarily resident, they must:

• Report the brokerage account and shares held in Schedule FA, for each calendar year.
• Report dividends in Schedule FSI, claiming credit for US withholding with Form 67.
• Report capital gains on sales, computed from the value taxed at vesting.

Using ITR-1 isn't possible for anyone with foreign assets — ITR-2 or ITR-3 is needed.

Old US Accounts

Many Hyderabad residents who previously worked in the US still have US bank accounts, 401(k) or IRA retirement accounts, or US property. These are foreign assets to report once they're ordinarily resident. Retirement accounts raise their own questions on when income is taxable in India, and how it interacts with the US treaty.

Returning NRIs and the RNOR Window

NRIs returning to Hyderabad usually qualify as 'resident but not ordinarily resident' for their first years back, depending on their history. During that period:

• Most foreign income isn't taxed in India.
• Schedule FA reporting generally doesn't apply.

It's the best time to decide what to do with foreign accounts and investments before becoming ordinarily resident.

Past Years Not Reported

If foreign assets weren't reported in past years, a revised or updated return may be possible within the time limits. The penalty relief for foreign assets up to ₹20 lakh, other than immovable property, may help smaller holders.

A Checklist for Hyderabad Tech Employees

1. List every foreign account and holding, including RSUs.
2. Report them in Schedule FA on a calendar-year basis.
3. Use ITR-2 or ITR-3, not ITR-1.
4. Claim credit for US tax on dividends with Form 67.
5. Returnees: plan foreign assets during the RNOR years.

Getting Help

Think Filing handles foreign asset reporting and RSU taxation for Hyderabad's tech professionals and returning NRIs.