I have some ESOPs($17k total) at my current company(startup, initial stage), vesting over 4 years with a one-year cliff (25% vested after my first year, monthly after). I have completed 1.5 years here.
I'm not sure if they're actually worth anything(no funding rounds since last 2-3 years, founder is saying he will raise in next 3-4 months), and I'm worried about the taxes when I eventually redeem them. Also I dont know about the redemption process. Could someone explain how this whole ESOP thing work, what the tax implications are, and where I can find more information?
what all should I ask to my manager/HR as we dont have any portal/guide where I can see all these information. these are the questions I have rn how to track how much is vested? how do I redeem them? can I not redeem them this year, will they still be available to me in next financial year?
You can get knowledge here, but are you willing to risk taxes from internet knowledge, or will you go to a CA?
Btw, there's no tax until you exercise the options. You should have a contract that mentions the acceptance of ESOPs.
Option exercise policy during and post employment depends on the organisation. You'll have to ask HR about it. It's also not set in stone, it's up to the discretion of the company.
And that's not what a cliff means. Lol. Cliff means that you have zero ESOPs/RSUs in the next year compared to current year.
Thanks for the reply! Consulting a CA is a valid suggestion, didn't think of that,
Consult a CA please. Also, @DiwaliBonus is absolutely right.
Unless the options are exercised, there is no taxation. If there is any liquidation event, meaning if there is any buyback of your esops then in that FY you are supposed to pay taxes and for that you need a CA's help.
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