Writing based on what I learnt and did. Would strongly recommend talking to CA.  
  
 - Till you exercise, nothing to be done in ITR 
 - At the time of exercise, pay tax based on notional profit. (FMV - exercise price). It is unfair but this is what the law states. Also note that fmv can be different from valuation at the time of fundraising.  
 - if the company is registered outside of India, you now own foreign asset. You will have to declare it in ITR. You will also have to fill out 15 CA / Cb while remitting money abroad while exercising

Thanks a lot. How do I avail service from a CA?

Product Manager

Check any local CA or ask a colleague. Better to have someone via reference

Analyst

No.  
  
 As long as you haven’t exercised any ESOPs there is nothing for you to report.  
  
 You only pay taxes and report when: you exercise (perquisite tax) and when you sell (capital gains).  
  
 Or if the company does a direct buy back then most likely you just end up paying perquisite then. You have nothing to worry about. 
  
 PS: I have spent years in this space.

Sourcing

I have worked in a startup which gave me ESOPs. I left the company and they have passed on to me my share of vested ESOPs in zenequity.  Do I need to mention this while filing ITR? Do I need to pay...

Welcome to Indian Startups's Private Community

I have worked in a startup which gave me ESOPs. I left the company and they have passed on to me my share of vested ESOPs in zenequity.

Do I need to mention this while filing ITR? Do I need to pay tax on it?

ESOPs in ITR

ESOPs in ITR- Grapevine

Welcome to Personal Finance's Private Community

Do we need to declare ESOPs vested, have not exercised the option yet?

Tax filing ESOPs?

Data Scientist

I’ve not exercised my ESOPs from my previous employer. I am waiting for the company to go public. I quit the company in 2021. What will my tax be if I exercise and sell my stocks at the time of IPO? How much tax can I save if I buy a property?

ESOPs taxation

Please share the knowledge you've about these two!

ESOPs vs RSUs

Product Owner

I have recently left Tekion and was considering executing my ESOPs. For executing my ESOPs I need to pay around $3.5 per esop to the company. Should I convert my esops to equity? Am looking for some advice from the folks who might have done this in the past.

Tekion ESOPs Execution

Hey 👋  
  
 I have worked with a lot of my clients who own ESOPs. 
  
 Some points to consider in your case: 
 1. Tekion is not a listed company. Finding a buyer for the shares will be difficult. Considering this, Are you comfortable holding the shares till IPO? 
  
 2. Tax: You will need to pay tax at the time of exercising ESOPs. Again, are you comfortable with paying tax upfront?  
  
 3. If you wish to sell shares through brokers, check if company has right of first refusal. This way, you can a good deal and sell the shares to company (prior to IPO).

Software Developer

Warning: This is a lengthy post. 

Filed some salaried ITRs during this tax period. Following are some of the common mistakes which can be avoided

1. If you have changed jobs ensure that income from previous job is disclosed to the current employer and TDS gets deducted correctly. One basic check you can do is the TDS deductions made by new employer should not be lesser than monthly deductions done by your previous employer unless you have lower CTC compared to your previous job or have additional deductions.

2. During Feb/March take your bank statement, trading account statement and declare the income from capital gains, dividends and interest to your employer, so TDS can be deducted accordingly. Helps in avoiding surprise cash outflow in July and saves from paying interest @ 1% per month on this tax

3. If you have ESOPs/RSU from Foreign Companies this should be disclosed in Foreign Assets and liabilities schedule. Some employers would have opened bank accounts in that country to settle your ESOP transactions. This is also required to be disclosed under foreign bank accounts. If the ESOPs and RSUs are from unlisted Companies then it also has to be disclosed under unlisted shares held. Additionally if you are Indian resident as per the Income tax law (most of you will be) your global income becomes taxable and any dividend received on these ESOPs or capital gain on sale of ESOPs of foreign Companies has to be offered to tax. However, if there are taxes deducted on these transactions the same can be claimed by filing Form 67.

4. For current year if you are in salary bracket above 20 lakhs then new regime will be beneficial mostly unless you have housing loan interest  from Self occupied property. Under new regime Employer contribution to NPS up to 10% of basic salary can be claimed as exemption.

5. Get a good consultant today itself and plan the your finances accordingly. In case of salaried individuals there are very less avenues to save tax after March

Income Tax

Chartered Accountant

Truths about ESOP 101 

After working in multiple fast growth startup’s and having been part of multiple buybacks as well as being in the startup ecosystem for a decade I want to put to bear my pov about creating wealth through ESOP. 

Like any other randomised event, ESOP also follows Pareto principle which means a very small number of people within the company ever make sizable wealth that they elevate to the top 0.1% of the country. 

The Pareto also applies with companies; significantly small minority of companies in India have employee friendly policies which enables an employee to create wealth. 

Most startup’s have dark patterns within their esop policy which either locks you in for insufferable durations or forces you to pay exorbitant taxes to gain the right to exercise your esops when you are leaving the company. 

Survivorship bias plays a huge role in enabling the narrative that esop is a great wealth generating tool leading to rude awakening for an employee after they join a company. 

This doesn’t mean you can’t make wealth, it just means don’t get carried away by narratives and take preventable errors in your career. 

Always talk to multiple people in startup’s and ask relevant questions to understand esop policies better. 

Like everything else optimising only for esop for wealth creation will mostly not result in it.

Unmasking ESOP wealth!

Consultant

Welcome to Office Gossip's Private Community

All Zomato employees including me and 3 more close friends dumped all our shares we got and bought after recent price hike.

Zomato employees dumped their shares

Business Development Manager

Hi, Say a Series B (US) funded startup gives me 3000 shares which are worth $5/share. It follows the usual vesting period of 4 years. Now assume 4 years have passed and all the 3000 shares are vested but the company hasn't gone IPO. 

Here are my quesions

- When exercising US stocks in India, what is the % of withholding tax I should pay?
- Say if I exercised all the shares and if I decide to leave the company do I get to keep those exercised shares with me forever?

I prefer answers from people who have exercised ESOPs before. I don't want answers like "It depends, Talk to your HR or CA". Appreciate any inputs.

Question on US based ESOPs in India

Primarily, my question targets startups which went ipo where you may joined when it was a private company and later it went public and you liquidates it. 
- will your esop units gets multiplied before ipo?
- will exercise price gets increased before ipo?
- what about the tax?
- are there any unknowns and nuances involved which you were not aware of and later realised?
I hold esops in a startup and want to understand how this works during an IPO

How much did you earned through esops via IPO?

Software Engineer

I had gotten a few shares of a company I used to work for. Unfortunately the time period to exercise the contract is just 90 days after I leave so that means either I have to lose all the shares since I didn't complete the whole vesting schedule or buy it from them!

I wanted to understand how the tax works in a case like this! The company is still not traded so I can't sell the shares but have to buy it and hold it until IPO!

Tax on ESOPs

Founder

Where did you work and how much money did you make?

Asking as it looks like a lot of promise of ESOPs and wealth creation has failed employees in this bloodbath slow growth, layoffs, and job changes.

"ESOPs made me rich af"

I have had ESOPS in 2 companies 
#1 - company got acquired ..I got 45 Lacs IN ESOP ...thats 1.5X of my last annualized salary  ( so additional salary for 18 months) 
#2 - Company became unicorn ... I quit and company bought my ESOPs . Got 2 Cr
That is 3X of my annualized salary

Company 1 - I had joined at very early stage ; Company 2 - I joined at mid-stage

UX/UI Designer

What happens to unexercised ESOP after IPO? I got to know that ESOP gets taxed at the time of exercise so it could lead to a huge financial burden. Also, is it possible to defer taxes after exercising of esops?

Unexercised option after IPO

CA here. In case anybody has any query regarding Income-tax return filing, can comment below. Will try to help you out as much as possible.

Income- tax Return

So i got the ESOPs in my current company and now they want me to exercise it as it is mandatory to exercise the ESOP in a certain period of time. What will happen once I exercise it?? Also i am thinking of quitting the company so what will happen to the exercised ESOP if I leave the company??

Please give any resources to understand the complete what, how and when of the ESOPs and general summary regarding it

Can anyone please explain to me the ESOP thing??

Frontend Engineer

Have been granted esops recently. What are the critical points that I should be mindful of before signing the esop policy (apart from the regular - vesting schedule, exercise price, etc.)? Anything that I should take note of or ask particularly?

ESOPs in ITR

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