Every time you look at vested shares in your brokerage account, there's a clock running. A 24-month clock from the vest date, counting toward the moment when selling becomes significantly cheaper from a tax perspective.
Most people know this threshold exists. Fewer know the actual numbers, the real trade-off, and when crossing the line is worth the wait.
The Rates (as of April 2026)
For US-listed shares held by an Indian resident:
Short-Term Capital Gains (STCG): Applies if you sell within 24 months of the vest date. Tax rate: 20% flat. No exemption. No deduction.
Long-Term Capital Gains (LTCG): Applies if you sell after 24 months from the vest date. Tax rate: 12.5% flat. First ₹1.25 lakh of gains per financial year is exempt across all equity asset sales.
These rates were revised upward in Budget 2024 (effective July 23, 2024) — STCG from 15% to 20%, LTCG from 10% to 12.5%. The ₹1 lakh LTCG exemption was simultaneously raised to ₹1.25 lakh. If you're working with older information, update your mental model.
Note: For Indian-listed shares (Freshworks, Zomato, Swiggy on NSE/BSE), the threshold is 12 months, not 24.
Source: Finance Act 2024: https://indiabudget.gov.in/doc/Finance_Bill_2024.pdf
The Real Rupee Difference
Let's run the numbers on a realistic scenario.
You have 300 shares that vested at $160 (≈ ₹13,360/share at TTBR of ₹83.5). Current price: $185 (≈ ₹15,466/share at TTBR of ₹83.6).
Capital gain per share: ₹15,466 − ₹13,360 = ₹2,106 Total gain on 300 shares: ₹6,31,800
Tax if sold before 24 months (STCG @ 20%): ₹1,26,360 Tax if sold after 24 months (LTCG @ 12.5%, ₹1.25L exempt): (₹6,31,800 − ₹1,25,000) × 12.5% = ₹63,350
Saving from waiting: ₹62,910
On a position this size, waiting out the 24-month threshold saves over ₹60,000. For senior employees with multiple vesting lots and larger positions, the saving scales into multiple lakhs.
📊 TABLE: "STCG vs LTCG — What the Numbers Look Like at Different Gain Levels" [Insert here: 4-row table] Capital gain | STCG tax (20%) | LTCG tax (12.5% above ₹1.25L) | Saving by waiting ₹2,00,000 | ₹40,000 | ₹9,375 | ₹30,625 ₹5,00,000 | ₹1,00,000 | ₹46,875 | ₹53,125 ₹10,00,000 | ₹2,00,000 | ₹1,09,375 | ₹90,625 ₹20,00,000 | ₹4,00,000 | ₹2,34,375 | ₹1,65,625
When Waiting Isn't Worth it
The LTCG calculation above assumes the stock doesn't fall before you hit 24 months. This is not guaranteed.
If you vest at $160 and the stock falls to $130 while you're waiting, you've lost $30/share in value. Even if you then sell at $130 (which is a capital loss, no tax due), the decline in stock value overwhelms the tax saving.
The question is not "should I wait for LTCG?" in isolation. The question is: "Do I believe this stock is stable or growing enough to hold for up to 24 months just for the tax benefit?"
That's an investment judgment, not a tax judgment. Don't confuse them.
A rough heuristic: if the stock would have to fall more than 7–8% for the STCG/LTCG tax difference to be irrelevant, and you're comfortable with that risk, waiting makes sense. If you're not comfortable with that risk, sell now and pay STCG.
How to Track the 24-month Clock Across Lots
Every vest creates a new lot with its own 24-month clock. If you vest quarterly, you have four clocks per year. After four years, you might have 15–20 active lots, each at different stages.
The practical approach: 1. In your brokerage platform, look at the Tax Lots section. 2. For each lot, note the vest date. 3. Calculate 24 months from that date — that's when it becomes LTCG-eligible. 4. Build a simple calendar or spreadsheet showing which lots cross the threshold in which month. 5. Prioritise selling LTCG-eligible lots first when you do sell.
The Ltcg ₹1.25 Lakh Annual Exemption
Each financial year, the first ₹1.25 lakh of long-term capital gains across all your equity investments (RSU shares, mutual funds, etc.) is exempt from tax. This resets every April 1.
Strategy: If you have small LTCG gains each year from different lots, you can potentially realise up to ₹1.25 lakh per year tax-free. This is a modest benefit, but it's real and worth factoring into your annual sell plan.
Advance Tax When a Large Ltcg Event Hits
If you sell a large lot and generate significant capital gains, you may need to pay advance tax on that gain — in quarterly installments, not just at filing. Failing to do so attracts interest under Sections 234B and 234C.
Capital gains are generally exempt from advance tax if they arise after the last installment date (March 15). But if you have a large sale in, say, September, you're expected to include those gains in the December installment.
This is a common surprise for people who make their first large RSU sale. Plan for it.
How Rovia Can Help
Rovia will show you your full lot picture — which lots are LTCG-eligible today, which are crossing the threshold in the next 3–6 months, and what the tax saving looks like for each one. From there, we'll help you build a sell plan that maximises LTCG treatment without unnecessarily concentrating your exposure.
Source: Budget 2024 capital gains changes: https://indiabudget.gov.in Source: Section 112A, Income Tax Act — LTCG on listed equity: https://incometaxindia.gov.in
