Form 67 for RSU Holders: When You Need It and How to File

The misconception that costs people Form 67 effort

Most engineers reading about Form 67 land here because of a misunderstanding: they think Form 67 is the form you file to claim credit for US tax withheld at their RSU vest. It is not. RSU vests for Indian residents do not trigger US ordinary-income withholding in the first place — under the India-US DTAA, with a current W-8BEN on file at the broker, India has full taxing rights on RSU vest income earned while you are an Indian resident. There is no US tax to credit because there is no US tax in the first place.

Form 67 matters in exactly one scenario for the typical RSU holder: US dividend withholding. If your employer's stock pays a dividend — Microsoft, Apple, Cisco, IBM, Salesforce — the US broker withholds 25% of every gross dividend payment under the treaty. To recover that 25% as a credit against your Indian tax on the same dividend, you file Form 67 along with your ITR.

At Amazon and Netflix, neither of which pays a dividend, Form 67 is a non-event for most years. At Google and Meta, both of which only started paying small dividends in mid-2024, Form 67 has begun to matter for the first time. The rest of this guide is the precise mechanics: when you actually need to file, what goes on the form, the worked example in rupees, and the four common mistakes that turn a routine FTC claim into a defective filing.

1. The DTAA mechanic underneath all of this

The India-US Double Taxation Avoidance Agreement (DTAA), signed in 1989 and in force since 1990, allocates taxing rights between the two countries for income earned by residents of one country from sources in the other. For RSU holders, two specific articles do most of the work:

• Article 16 — Dependent Personal Services. Salary and salary-like income (including RSU vest perquisite) is taxable in the country where the work is performed. For an Indian-resident employee working from Bengaluru or Hyderabad, that is India. The US gets no taxing right on the vest itself.
• Article 10 — Dividends. Dividends paid by a US company to an Indian resident are taxable in both countries — but the US withholding rate is capped at 25% (versus the default 30% NRA withholding) provided the recipient has filed Form W-8BEN. India then taxes the gross dividend at the recipient's slab rate, and the recipient claims a foreign tax credit for the 25% already paid in the US.

The W-8BEN is the gating document. It tells the US broker you are a non-US person and you are claiming the treaty rate under your country of residence. Without a current W-8BEN, the broker defaults to 30% backup withholding on dividends and starts withholding on other US-source income too. W-8BEN expires three calendar years after signature — most Indian-resident RSU holders should be re-signing it every two years on a calendar reminder.

Form 67 is the Indian-side counterpart: the form that converts that 25% US withholding into a credit against your Indian tax on the same income. Without Form 67, the 25% is gone and India still taxes the gross dividend at your slab — which means you have paid the US 25% and India ~36%, an effective double-tax of ~61% on the same dividend income.

2. Which RSUs actually pay dividends

Form 67 is a wasted exercise for engineers at companies that do not pay dividends. Before reading further, check whether yours does. As of the AY 2026-27 filing season:

The 2024 inflection at Google and Meta matters: a cohort of engineers at those two companies — who have historically never had to think about Form 67 — now do, starting with the dividend cycle that landed in their Schwab and Morgan Stanley accounts during calendar year 2024. The amounts are small in percentage terms but absolute numbers add up: a Google L6 holding 300 GOOG worth ~$60K at a 0.4% yield collects ~$240/year of dividend, 25% of which (~₹5,000) is US-withheld and recoverable only via Form 67.

Yields shift year to year. Always check your actual 1042-S, not the table above, before filing.

3. When you actually need to file

You need Form 67 if both of these are true for the relevant financial year:

1. You received US-source income (dividends, in the RSU case) on which US tax was actually withheld at source; and
2. You want to claim that withholding as a credit against your Indian tax otherwise payable on the same income.

If either is false, Form 67 is not needed. Practical examples:

• Amazon engineer, no other US holdings. AMZN pays no dividend; your 1042-S shows $0 withheld. No Form 67.
• Microsoft engineer holding 600 MSFT. MSFT pays ~$3/share annual dividend = ~$1,800/year gross, US withholds 25% = $450 at source. Yes Form 67.
• Google engineer, dividend started Q3 2024. ~$240 dividend, US withholds $60. Small but yes Form 67 if you want to recover the ₹5,000 credit.
• Anyone whose 1042-S shows $0. Whether because the stock does not pay or because the broker correctly applied a 0% treaty rate to a different income type — no withholding, no credit, no Form 67.

4. The mechanics — what Form 67 actually requires

Form 67 is filed online through the income tax e-filing portal under e-File → Income Tax Forms → File Income Tax Forms → Form 67. Three operational rules govern it.

The deadline rule

Under Rule 128 of the Income Tax Rules, Form 67 must be filed on or before the due date of furnishing the ITR (Section 139(1)). For a salaried filer without audit, that is July 31 of the assessment year — same as the ITR deadline. Form 67 filed after ITR submission, or after the due date, makes the FTC claim defective.

Practically, this means: file Form 67 first, then file the ITR. The ITR references the Form 67 acknowledgement number in the FTC schedule. Reversing the order is the most common error in this process.

The documents you need

• Tax Residency Certificate (TRC). Issued by your Indian assessing officer in response to an application via Form 10FA. Confirms you are an Indian resident for the relevant year. Required to claim treaty benefits.
• Form 1042-S from your US broker. The year-end summary of US-source income paid to your account and the US tax withheld. Each 1042-S line corresponds to an income type and a withholding rate. For RSU holders, the relevant line is dividend income (income code 06).
• Form 10F. A self-declaration submitted on the income tax portal that supplements the TRC with details required by Indian rules (status, PAN, address, period of residency). One Form 10F per assessment year.

What goes on the form itself

Form 67 collects, per source country:

• The country code (United States = 2)
• The nature of income (dividend, interest, etc.)
• The gross income amount in INR
• The tax paid in the foreign country, in INR
• The DTAA article relied upon (Article 10 for dividends)
• The foreign tax credit being claimed

Conversion to INR uses the State Bank of India TT buying rate on the last day of the month immediately preceding the month in which the income was received, per Rule 26 — a different rate convention than the vest-day RBI TT rate used for capital gains. Most filers get this wrong on first attempt.

5. The FTC limit — you do not always recover the full 25%

The credit you can claim under Section 90 of the Income Tax Act is capped at the lower of:

1. (a) The foreign tax actually paid (25% of gross dividend in the US RSU case); or
2. (b) The Indian tax otherwise payable on that same foreign income at your applicable rate (slab rate for dividends, since dividend income is taxed at slab under Section 115BBDA repealed and current regime).

For a senior IC in the 30% slab with 4% cess and 15% surcharge — total effective 35.88% — Indian tax on the dividend exceeds US withholding, so the cap is the US withholding (25%) and you recover the full 25%. Net India tax payable on the dividend = 35.88% − 25% = 10.88%.

For a filer in a lower slab — say, 20% slab with no surcharge, total effective 20.8% — Indian tax on the dividend is less than US withholding, so the cap is the Indian liability (20.8%) and you can only claim 20.8% credit. The 4.2% differential US withholding is lost; the US does not refund the excess via Indian processes. This is one structural inefficiency of the DTAA mechanism — a worker on a lower tax slab effectively loses the differential.

6. Worked example — Vikram at Microsoft Hyderabad

Meet Vikram. Senior software engineer at Microsoft Hyderabad, ₹95L base, total income comfortably in the highest slab with the 15% surcharge band. He has accumulated 600 vested MSFT shares across multiple grants and is past the 24-month LTCG clock on most of them.

For FY 2025-26, MSFT pays ~$3.00/share in total annual dividend (four quarterly payments of $0.75 each). His broker (Morgan Stanley StockPlan) credits each quarterly dividend gross of US tax, then withholds 25% under the treaty rate from the credited amount.

Vikram's total tax on this dividend, with Form 67 filed correctly: ₹37,800 (US) + ₹16,450 (India) = ₹54,250 total, equal to his Indian slab rate of 35.88% on the gross dividend. The DTAA mechanic has done its job — he is taxed once, at his higher of the two countries' rates.

7. The four mistakes that defective-file Form 67

Mistake 1 — Filing Form 67 after the ITR. The most common error. Filers complete the ITR, realize they should also have claimed FTC, then go file Form 67 afterward. Under Rule 128, the FTC claim is then defective and the credit is disallowed. Always file Form 67 first, then the ITR — and reference the Form 67 acknowledgement number in the ITR's FTC schedule.

Mistake 2 — Not attaching the 1042-S. Form 67 requires documentary evidence of the foreign tax paid. The 1042-S issued by the US broker is the canonical document. Filers sometimes attach only the broker monthly statement or a screenshot of the dividend transaction — both insufficient. The IT Department wants the 1042-S, in PDF, attached to the Form 67 e-filing.

Mistake 3 — Using the wrong INR conversion rate. For Form 67, the INR conversion rate is the SBI TT buying rate on the last day of the month immediately preceding the month of receipt, per Rule 26. This is a different convention than the vest-day RBI TT rate used for capital gains. Using the wrong rate triggers reconciliation errors against the 1042-S figures the department already has.

Mistake 4 — Over-claiming credit beyond Indian liability. If you are in a lower slab where Indian tax on the dividend is less than the 25% US withholding, you cannot claim the full 25% — the credit is capped at the lower Indian liability. Claiming more triggers either an outright disallowance or a refund-mismatch notice. Always run the cap calculation before populating Form 67.

8. What Rovia does

Form 67 is one form per year, but the surrounding logistics — 1042-S parsing, TRC tracking, INR conversion at the correct preceding-month-end rate, FTC cap calculation, ordering against ITR submission — is exactly the kind of repetitive low-value paperwork that an automated platform should remove from your July.

• 1042-S ingestion. Upload (or auto-pull, where the broker supports OAuth) your annual 1042-S. Each line is parsed into income type, gross amount, withholding rate.
• INR conversion at the right rate. SBI TT buying rate on the preceding month-end, applied per dividend payment date — not the broker rate, not the vest-day rate, not the year-average rate.
• FTC cap calculation. Your applicable Indian slab on the dividend income is computed and the credit is capped at the lower of US withholding and Indian liability — so you never over-claim.
• TRC reminder and Form 10F prep. Calendar reminders for TRC application in May/June; Form 10F draft generated for your portal submission.
• ITR-portal-compatible output. Form 67 fields are output in the exact format the e-filing portal accepts, with the acknowledgement number then carried into your ITR's FTC schedule.

For the broader RSU tax picture, see the RSU Taxation pillar. The per-company broker pages walk through which platform your dividends and 1042-S come from: Microsoft (Morgan Stanley), Apple (Schwab).

Frequently asked questions

Last reviewed June 1, 2026. DTAA rates and Form 67 procedure reflect Rule 128 of the Income Tax Rules as in force for AY 2026-27. Dividend yields are approximate and shift quarter to quarter — verify against your actual 1042-S before filing. This article is informational and not personalised tax advice — your specific position should be reviewed by a qualified chartered accountant.