RSU
Also known as: Restricted Stock, Stock Units
Restricted Stock Units - Company shares granted to employees that vest over time and are taxed as salary when vested.
Detailed Explanation
RSU (Restricted Stock Units) are company shares granted to employees that vest according to a schedule (usually time-based). Unlike ESOPs, RSUs are taxed as perquisite income when they vest, not when sold. The FMV at vesting becomes the cost basis for future capital gains calculations. Common in tech companies, especially foreign corporations.
Related Calculators
Related Terms
ESOP
Employee Stock Option Plan - A benefit plan giving employees the right to buy company shares at a predetermined exercise price.
FMV
Fair Market Value - The price at which shares would trade between willing buyers and sellers in an open market.
Perquisite Tax
Tax on employment benefits valued in money, including ESOP exercise gains and RSU vesting, taxed as salary income.
Vesting
The process by which employees earn rights to ESOPs or RSUs over time, typically following a predefined schedule.
TDS
Tax Deducted at Source - Tax collected by the payer before making payment to the payee.