Karthik is a senior engineer at a US-headquartered tech company's Hyderabad office. Base salary ₹32 LPA, decent by any measure. But the number that actually changed his life was the offer letter line that said “RSU grant: $180,000 over 4 years.” At the exchange rate on his offer date, that was roughly ₹1.5 crore. Four years later, his brokerage app shows almost exactly that — ₹1.5 crore in vested and unvested company stock.
He feels rich. He is not entirely sure he is. When he tries to plug this into a FIRE calculator, he hits a wall — is the unvested stock his money or not? What happens to the ₹1.5 crore after tax? And is it reckless that his retirement corpus and his salary both depend on the same company's stock price?
These are the right questions. Almost nobody in Indian FIRE content answers them, because most FIRE writing is aimed at salaried professionals with mutual funds and EPF — not the growing number of MNC and startup employees whose comp is 20-40% equity.
What You Actually Have
Two very different things get lumped together as “equity comp” and they behave nothing alike for FIRE purposes.
RSUs (Restricted Stock Units) — common at MNCs (Google, Amazon, Microsoft, Atlassian, Walmart Global Tech, and similar). You are granted units on a schedule (typically 25% a year over 4 years, sometimes back-loaded). On each vest date, the shares become yours outright and are liquid — you can sell them the same day on a public exchange. There is no exercise price; the entire value is yours minus tax.
ESOPs (Employee Stock Options) — common at startups. You are granted the option to buy shares at a fixed strike price, usually vesting over 4 years with a 1-year cliff. Unlike RSUs, two things stand between you and cash: you have to exercise (pay the strike price) and the company has to become liquid (IPO, acquisition, or a secondary sale/buyback window) before the shares are worth anything you can spend.
That difference is the whole ballgame for FIRE planning. RSUs are slow-motion salary that happens to be paid in stock. ESOPs are a lottery ticket with a strike price attached.
Rule One: Unvested Is Not Corpus
The single most common mistake is counting the full 4-year grant value — vested plus unvested — as part of today's net worth. It is not. Unvested RSUs are conditional future income: you only receive them if you are still employed on the vest date and the stock price on that date is whatever it happens to be. Treating them as corpus today double-counts money that does not exist yet and assumes away the biggest risk (leaving, being let go, or a price drop before vesting).
Counts toward your FIRE number
- Vested RSUs, marked to current price
- Minus reserved tax on sale (see below)
- Exercised ESOP shares post-liquidity event
- Cash already banked from a prior sale
Treat as future income, not corpus
- Unvested RSUs, current and future grants
- Unannounced refresher grants (not guaranteed)
- Unexercised ESOPs pre-liquidity
- Any startup valuation you saw in a funding-round headline
This does not mean unvested equity is worthless to your plan — it means it belongs in your income projection (it reduces how much you need to save from salary each month) rather than in your net worth snapshot. Two different roles, easy to conflate, important not to.
Rule Two: Subtract the Tax Before You Count It
This is where most people overstate their number. RSU value shows up on a brokerage screen pre-tax. What you would actually walk away with after selling is meaningfully lower, and Indian tax treatment of foreign employer stock has two separate layers.
The Two-Layer Tax on RSUs
1. At vesting — the fair market value of the shares on the vest date is added to your salary as a perquisite and taxed at your slab rate (up to 30% + cess for most people in this income bracket). Your employer usually withholds this via payroll or a “sell-to-cover” on a portion of the shares. This FMV also becomes your cost basis for the next layer.
2. At sale — the difference between sale price and that cost basis is a capital gain. For foreign-listed stock (US exchanges), holding under 24 months from vesting is short-term, taxed at your slab rate. Over 24 months is long-term, taxed at a flat 12.5% with no indexation benefit.
Practically: the perquisite tax is usually already handled at vesting, so what you see land in your demat/brokerage account is roughly post-slab-tax already. The capital gains layer is the one people forget about when they finally sell — reserve for it rather than being surprised at filing time.
Don't Skip: Schedule FA
Holding shares of a foreign company — which is exactly what MNC RSUs are — makes you a holder of foreign assets. You are required to disclose these every year in Schedule FA of your income tax return, even in years you did not sell anything. Non-disclosure falls under the Black Money Act and carries a penalty of up to ₹10 lakh per year of non-disclosure. This is a genuinely under-known rule among first-time RSU holders in India — worth a five-minute conversation with your CA, not something to find out about later.
Karthik's Actual Number
Back to Karthik. His brokerage app shows ₹1.5 crore. Here is what that breaks down to once the rules above are applied.
₹72 lakhs, not ₹1.5 crore. Less than half of what the app makes it look like — and that gap is exactly the mistake most equity-comp holders make when they eyeball their FIRE progress. The other ₹70 lakhs of unvested stock is real, but it belongs in his “future income reduces required SIP” column, not his net worth column.
See how this equity fits your full FIRE number
Once you know your India-adjusted FIRE target, treat vested equity (post-tax) exactly like any other corpus line item — mutual funds, EPF, vested RSUs, all summed together.
Calculate my FIRE Number →The Risk Nobody Prices In: Concentration
Here is the part that matters more than the tax math. Karthik's salary depends on his employer. His bonus depends on his employer. And now ₹70+ lakhs of his net worth also depends on the same employer's stock price. These are not three independent bets — they are one bet, made three times.
When a company hits a rough patch, it rarely hits just the stock price. Hiring freezes, smaller bonuses, layoff risk, and a falling stock price tend to arrive together, because they share the same root cause. If you are laid off in the same downturn that depresses your employer stock, you lose income and net worth at the same moment — the worst possible time to also be forced to sell equity at a low price to cover expenses.
This is not a hypothetical for Indian tech employees. Every major layoff cycle at global tech companies in the last few years has come bundled with the stock trading well below its highs at the exact time people needed liquidity most.
A reasonable rule of thumb
Cap employer stock — vested RSUs you have chosen to hold, plus any exercised ESOP shares — at 10-15% of your total net worth. Below that, a bad quarter for your employer dents your portfolio without derailing your FIRE plan. Above 25-30%, you are effectively running a concentrated single-stock bet alongside your day job, whether you intended to or not.
What to Actually Do at Each Vest
Unlike the US, where selling immediately at vest avoids incurring extra tax versus holding, the tax angle in India is roughly neutral either way — the perquisite tax is already locked in at vesting regardless of what you do next. So the sell-or-hold decision here is purely a concentration and conviction call, not a tax-optimisation one.
Sell on vest, every time
The simplest and most disciplined approach. Every vest, sell the shares and redirect the proceeds into diversified index funds — Nifty 50 / Nifty 500 for Indian equity exposure, or a Nasdaq-100 / S&P 500 index fund if you still want US-market exposure without it being tied to one company. Either way it is spread across dozens or hundreds of companies instead of one. You already took the concentration risk for four years waiting to vest — you do not need to take it again after the shares are liquid.
Hold up to a cap, sell the rest
If you have genuine conviction in the company and want some upside exposure, hold a fixed amount (say, ₹8-10 lakhs, or whatever keeps you under the 10-15% net worth cap) and sell everything above it at each vest. Rebalance back down whenever price appreciation pushes you back over the cap.
Hold everything
Common, rarely a good idea unless you have a specific, informed reason. This is the path that turns “I work at a good company” into “my retirement depends entirely on one company,” usually without anyone deciding that on purpose — it just accumulates one vest at a time.
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The Special Case: Startup ESOPs
If your equity comp is options in a private company rather than RSUs in a listed one, apply a stricter rule: count it as zero in your FIRE number until there is an actual liquidity event — an IPO, an acquisition, or a company-run secondary sale/tender offer where you can genuinely convert shares to cash.
The reasons stack up. Paper valuations from funding rounds are set by a handful of preferred-share investors and often do not reflect what common shareholders (employees) would actually receive in an acquisition, after liquidation preferences are paid out first. You usually cannot sell your shares to anyone else even if you wanted to — there is no market. And exercising costs real cash upfront (strike price, possibly AMT-equivalent tax exposure) with no guarantee the company is ever worth more than that.
Plenty of people have retired early on a successful exit. Plenty of others have spent years believing they were most of the way to FIRE because of a valuation headline, only for the company to shut down or get acquired for less than the last preferred round. Build your plan on your salary and liquid investments. Let the ESOP outcome be a bonus if it happens, never the plan itself.
“Vested and liquid is money. Vesting and illiquid is a job benefit. Unvested and private is a hope. Your FIRE number should only be built from the first one.”
The Short Version
- Vested, liquid RSUs are corpus — marked to current price, minus a reserve for capital gains tax on eventual sale. Unvested RSUs are future income, not today's net worth.
- The Indian tax treatment has two layers: perquisite tax at vesting, then capital gains at sale. Holding foreign shares also brings an annual Schedule FA disclosure requirement, independent of whether anything was sold that year.
- Salary, bonus, and employer stock are one correlated bet, not three independent ones — that correlation, not just the stock price, is the real risk being carried.
- Selling at vest and diversifying into broader index funds removes that concentration without changing the tax already paid — the sell-or-hold decision is a risk call, not a tax-optimisation one.
- Private-company ESOPs are illiquid by design. Treating unexercised, pre-liquidity options as zero avoids building a plan around a number that may never become real.
Karthik's real number is ₹72 lakhs, not ₹1.5 crore — and that is still a genuinely good outcome from four years of vesting. It is just the accurate number, which is the only kind that belongs in a FIRE plan. The stock can keep compounding in the background of his plan. It just should not be doing so as the biggest single line on his balance sheet.