Question

he asked what are you doing now change into indirect

Answer 1

If Sally’s question was directed to me, and if I were to report the speech indirectly, it would be "Sally asked what I was doing."

If Sally’s question was directed to a third person, and if I were to report the speech indirectly, I would say "Sally asked what you were doing," if I were addressing that same third person, or otherwise "Sally asked what he(she/they) was(were) doing."