200 Microsoft shares. Two tax bills.
Sell them all today and you pay one bill. Sell each lot at the right time and you pay a smaller one. This guide shows you how.
Indian tax for a resident. Illustrative example, not tax advice. Not affiliated with Microsoft. Prefer one page?
Arjun works at Microsoft in Bengaluru.
He got shares every quarter. 10 vests left him 200 shares.
He is buying a home. He wants his shares to pay the down payment and the EMI.
His numbers are an example. Try your own below.
Shares today are worth ₹95.0 L.
You already paid tax once.
On each vest day, the value of the shares is added to your salary. You pay tax on it at your slab.
Microsoft sells some shares to pay that tax. This is “sell-to-cover”.
The vest-day value becomes your cost. When you sell, you pay tax only on the gain above it.
₹35,026
₹35,026
₹12,474
One share from the Nov 2024 vest: $415 × ₹84.4 then, $500 × ₹95 now.
Not 12 months. 24.
India treats US shares as “unlisted”. No Indian exchange. No securities transaction tax.
Unlisted shares become long-term only after you hold them for more than 24 months from the vest date.
Many engineers sell at 13 months. They pay the higher rate.
long-term now · date it turns long-term
12.5% or your slab.
Long-term gain: 12.5%. No indexation.
Short-term gain: added to your income. You pay your slab rate, often 30%.
Surcharge and 4% cess come on top. Surcharge on long-term gain stops at 15%.
Your effective rates, with surcharge and cess. Long-term costs 2.4× less.
Waiting is worth money.
Sell all 200 shares today: 7 of 10 lots are still short-term.
Sell each lot on the day it turns long-term: every lot pays 12.5%.
Same price. Same rupee rate. Only the date changes.
Know each lot’s date.
Each lot has its own vest date. Each lot turns long-term on its own date.
Some lots may be below their vest value. They have no tax. Their loss can reduce tax on other gains.
Sell a little, every quarter.
Do not sell for the full year on one day.
Each quarter, sell only what the next three EMIs need. Sell from long-term lots, oldest first.
Keep the rest invested. Keep some EMI money in the bank, so you never have to sell short-term.
₹15.2 L raised for ₹60,642 tax, all at the long-term rate.
Put the gain into a home. Pay ₹0.
Section 86 of the Income-tax Act 2025 (old Section 54F) helps home buyers.
Sell long-term shares. Put the money into one house in India. The gain is not taxed.
Buy within 1 year before or 2 years after the sale, or build within 3. Do not own more than one other house on the sale date.
60 long-term shares raise ₹28.5 L. Put in all of it and ₹7.7 L of gain is exempt. Put in less, and only that share of the gain is exempt. The cap is ₹10 crore.
Tell the tax office. Every year.
List your US shares and your broker account in Schedule FA. Do this every year, even if you sell nothing.
If you do not, the penalty can be ₹10 lakh. It is waived only if all your foreign assets are under ₹20 lakh.
Report each sale in Schedule CG. File Form 67 to get credit for US tax on dividends.
Schedule FA covers the calendar year (Jan–Dec). After a big sale, pay advance tax in the next instalment to avoid interest.
Do this. Not that.
Do
- Keep a sheet of every lot: vest date, shares, value at vest.
- Sell lots older than 24 months first.
- Keep some EMI money in the bank.
- Spread big sales across financial years.
- Time a home purchase to use Section 86.
- File Schedule FA and Form 67 every year.
Avoid
- Thinking 12 months makes US shares long-term.
- Selling your newest lots in a hurry.
- Counting shares that sell-to-cover already sold.
- Forgetting the rupee: a flat dollar price can still be a rupee gain.
- Keeping most of your money in one company’s stock.
- Skipping Schedule FA in a year with no sale.
Now try your shares.
Open Morgan Stanley at Work (StockPlan Connect or E*TRADE). Find your release history.
For each vest, copy the date, the shares you still hold, and the price at vest. Your payslip shows the rupee value.
Type them here. Every slide updates.
Your plan: ₹2,71,197 tax if each lot waits for 24 months, against ₹4,96,233 today.
Plan your real lots with us.
We map your vests. We plan your sales around your EMI or down payment. We line up the home purchase, so Section 86 works for you. No commission from builders.
Rules as of October 2026, for a resident individual: capital gains rates from 23 July 2024; Section 86 of the Income-tax Act 2025 (Section 54F of the 1961 Act); ₹20 lakh foreign-asset penalty relief from 1 October 2024. Your CA converts rupee values at SBI rates (Rule 115), so final numbers differ a little. Illustrative, not tax advice.