ESOP Tax Calculator India — Perquisite at Exercise & the DPIIT Deferral
ESOPs are taxed before you see any cash: the gap between FMV and your exercise price is salary income the moment you exercise. Compute the tax, and check whether the startup deferral under Section 392(3) applies to you.
| Income-tax Act, 1961 | Income-tax Act, 2025 | Provision |
|---|---|---|
| Section 17(2)(vi) | Section 17 | Perquisite on specified securities / sweat equity |
| Section 192(1C) | Section 392(3) | Startup ESOP tax deferral (eligible start-up employer) |
| Section 80-IAC | Section 140 | Eligible start-up — definition and tax holiday |
Exercise details
Computation
Exercising ESOPs this year?
The perquisite, the deferral election and the capital-gains planning are worth one conversation before you exercise, not after.
Book a 15-minute callFrequently asked questions
When are ESOPs taxed in India?
Twice. The perquisite (FMV minus exercise price) is taxed as salary at exercise, and the further gain is taxed as capital gains when the shares are sold.
What is the ESOP tax deferral for startup employees?
Employees of DPIIT-recognised eligible startups can defer the exercise-stage tax under Section 392(3) until the earliest of: 48 months from the end of the relevant assessment year, sale of the shares, or leaving the company – payable within 14 days of that event.
How is the FMV of unlisted ESOP shares determined?
By a merchant-banker valuation under Rule 3(8) of the Income-tax Rules as on the exercise date. The perquisite is FMV minus what you actually pay.