if you exercise ESOPs they become shares under your name. you have to pay taxes on  
  
 (no. of ESOPs you want to exercise)*(FMV - strike price).  
  
 FMV is usually share value as per the recent most valuation.

paid ESOPs taxes this year. exact same situation like yours. shoot more questions if you feel like.

Software Engineer

Founder

When u will buy/sell it u have to pay tax. 
  
 Basically dual tax.

What I mean is what kind of tax is it Capital Gains or Income?

Senior Consultant

If I'm not wrong STCG is taxed the same as Income Tax.

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 si...

Welcome to Personal Finance's Private Community

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

Tax on ESOPs- Grapevine

Welcome to Indian Startups's Private Community

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

Analyst

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

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

So say one has 100 ESOPs which a person exercised and converted to say 1000 shares  in say Jan 2024

Now if IPO happens in aug 2024, what will be the long term capital gains tax rate for these shares.

Will the tax rate change if one sells them say in Feb 2025, sept 2025 , Feb 2028 considering tax policy, tax rates to remain unchanged?

How's are captial gains taxed post IPO sell off?

UX/UI Designer

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

Started working in 2017 (Graduation: Tier 2 College)  in hand salary: 28K per Month. Worked for 2.5yrs, had big dreams, didn’t knew what to do, how do I 10x my salary, saw my manager 40yrs old earning 25LPA in the same company. Realised I don’t want to do this for the next 20yrs and the reach at 25LPA. Started preparing for UPSC (wanted to make it big) realised within 6 months, this is not my cup of tea, appeared for MBA entrance, cleared the exam joined Tier 1 MBA, post MBA: 25LPA + XX Esops in next two years at 1.2Cr CTC inc ESOPs. 

Before 2030 plan to achieve FIRE with 8Cr networth. By 2040 make it 100Cr and retire. Chill at beach with beer in hand and two other friends. 

What’s your story, do share those goldmine inspirational stories!!

Story of Middle Class guy from 3.5LPA CTC to 1.2Cr CTC (46Base + 72Esops) in 4 yrs

Are you considering 72L esops of razorpay as your own networth? 🤔🤔

Senior Product Manager

Please share the knowledge you've about these two!

ESOPs vs RSUs

Product Owner

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

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

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

Product Manager

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 - what should I know?

I had a very basic doubt.
For people who've exercised their stock options or have had some similar experience with this in the past, what's best way to limit the tax liability?

My company is registered in the US - would i have to pay taxes to both the governments?

Thanks in advance and have a great day ahead!

Tax liability for vested stock options

How do you understand that Esops alloted in ctc are good enough?
Do companies have them fixed as percentage of ctc (ex. 30% of ctc) or how does it work?

What are the questions i can ask to get a better understanding of the Esops?
One would be current valuation, last buyback time, what else?

Is there any good resource to understand this?

How to evaluate ESOPs?

Welcome to Software Engineers's Private Community

Hi, I have an ESOPs related question. Appreciate any inputs. 

Consider a Series B startup providing an employee with 5000 shares. After 2 years, 2000 shares are vested and exercised by the employee. The stocks were never liquidated because the company didn't conduct buyback nor went IPO. 

Now, assume the company lays off that employee after 2 years,

- Can he still hold the vested and exercised 2000 shares? 
- If yes, then can he sell those stocks during future buyback even if he isn't an employee?
- Will the company provide accelerated vesting for the remaining 3000 shares during layoff? (not mentioned on offer letter)

Tax on ESOPs

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