ESOPs: exercise and sale
Sample: Dev, 34, early employee at an eligible startup in Bengaluru. Exercised 4,000 options.
₹7,15,000 tax deferred up to 4 years
At exercise the gain is salary. An eligible startup's staff pay that tax later. At sale, the rest is a capital gain.
ITR-2New regimeFY 2026-27
At exercise, FY 2026-27
| Salary | ₹32,00,000 |
| ESOP perquisite: 4,000 x (₹520 FMV less ₹20) | ₹20,00,000 |
| Standard deduction | (₹75,000) |
| Total income | ₹51,25,000 |
| Tax for the year with surcharge and cess | ₹12,53,200 |
| Of which on the ESOP, deferred | (₹7,15,000) |
| Tax payable now | ₹5,38,200 |
At sale after 30 months, ₹800 a share
| Sale value | ₹32,00,000 |
| Cost: FMV at exercise | (₹20,80,000) |
| Long term gain | ₹11,20,000 |
| Tax at 12.5% plus cess | ₹1,45,600 |
Deferred ESOP tax₹7,15,000