ESOP Perquisite Tax Calculator for CAs
Calculate perquisite tax on ESOP exercise for startup employees and determine TDS obligations — including the DPIIT recognised startup deferral.
Indicative only. Surcharge applies if employee income exceeds ₹50L. FMV for unlisted shares is determined by a Category I Merchant Banker under Rule 3(10A) of Income Tax Rules. Consult your CA or payroll specialist.
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Frequently asked questions
How is ESOP perquisite value calculated for income tax in India?
Perquisite value = (FMV at exercise date − Exercise price) × Number of shares exercised. This is added to the employee's total income for the year and taxed at their applicable slab rate as salary income. The employer must include it in Form 16 and deduct TDS accordingly.
When must a company deduct TDS on ESOP exercise?
For unlisted non-startup companies and listed companies: TDS must be deducted at the time of exercise and remitted by the 7th of the following month. For DPIIT-recognised startups under Section 192(2BC): TDS is deferred — no deduction required at exercise. Tax becomes due at the earliest of 60 months from exercise, employee leaving, or share sale.
What is the tax rate on ESOP perquisite for startup employees?
The perquisite is taxed at the employee's applicable income tax slab rate — 5%, 20%, or 30% plus 4% education cess. Add surcharge if annual income exceeds ₹50 lakh. The employer must deduct TDS at the applicable marginal rate based on estimated annual income.
Do DPIIT-recognised startups have to deduct TDS on ESOP exercise?
No. Under Section 192(2BC), DPIIT-recognised startups are not required to deduct TDS at the time of ESOP exercise. The tax obligation is deferred to the earliest of 5 years from exercise, the employee leaving, or the employee selling the shares. The employer must still report the deferred amount in Form 24Q.
What is the FMV of unlisted company shares for ESOP tax purposes?
Under Rule 3(9), FMV of unlisted company shares must be determined by a SEBI-registered Category I Merchant Banker using the DCF method. The valuation is valid for 6 months. Using an outdated or incorrect valuation can trigger reassessment of the perquisite value by the IT department.