Rupeemeter

ESOP tax calculator

Work out the tax when you exercise stock options, when a start-up deferral makes it payable, and the capital gains when you sell.

Updated for FY 2026-27 (tax year 2026-27) ·

₹25 lakh Salary after deductions. Sets the slab your perquisite falls into.

For foreign shares, convert to rupees at the rate your employer uses.

Tax regime

Tax on the perquisite at exercise

on a perquisite of ₹1,50,000 · 31.2% effective

Step 1: at exercise (taxed as salary)
FMV × shares₹2,00,000
Less: exercise price paid−₹50,000
Perquisite added to salary₹1,50,000
Extra tax (incl. cess)₹46,800

What are ESOPs?

Employee stock options give you the right to buy your employer’s shares at a fixed exercise price. You pay that price when you exercise, and the difference between the market value and the price is taxed as salary.

How to use this calculator

  1. Enter your other taxable income for the year (salary after deductions).
  2. Enter the number of shares and the fair market value per share on the exercise date, and the exercise price.
  3. Pick your tax regime and whether your employer is an eligible start-up.
  4. Optionally turn on the sale section to estimate capital gains tax.

Tax on a ₹2 lakh perquisite at different incomes

New regime. The same perquisite costs more as your other income rises into higher slabs.

Other taxable incomeExtra tax on ₹2 lakh
₹10,00,000₹0
₹15,00,000₹36,400
₹25,00,000₹62,400
₹60,00,000₹68,640

How ESOPs are taxed

At exercise: perquisite = (FMV on exercise date − exercise price) × shares → slab rate
On sale: gain = sale value − FMV on exercise date → capital gains

Worked example

Exercising 1,000 options at ₹100 when FMV is ₹500, with other taxable income of ₹25 lakh (new regime): perquisite ₹4,00,000, extra tax ₹1,24,800. For an eligible start-up and an exercise in tax year 2026-27, that tax is due by 2032-04-14 at the latest, or earlier if you sell or leave.

Assumptions and limits

  • Eligibility for the deferral is your input; check your employer’s certificate.
  • Resident individual; treaties and foreign tax credit are not modelled.
  • Surcharge on capital gains is capped at 15%; marginal relief on it is not modelled.

Frequently asked questions

When are ESOPs taxed?

Not when they are granted or vest, but when you exercise them: the fair market value on the exercise date minus the exercise price is taxed as salary. When you later sell, the rise above that FMV is taxed as capital gains.

How does the start-up tax deferral work?

If your employer is an eligible start-up, tax on the perquisite is payable within 14 days of the earliest of: 60 months after the end of the tax year of exercise, the date you sell the shares, or the date you leave the company (section 289(3)).

Which start-ups are eligible?

A company or LLP incorporated on or after 1 April 2016 and before 1 April 2030, with turnover up to ₹300 crore (raised from ₹100 crore by the Finance Act, 2026), holding a certificate of eligible business from the Inter-Ministerial Board (section 140(16)).

How is FMV decided for unlisted start-up shares?

A Category I merchant banker values the shares on the exercise date or a date up to 180 days before it (rule 15 of the Income-tax Rules, 2026).

Is the deferred tax calculated at future rates?

No. It is calculated at the rates in force for the tax year in which the shares were allotted (section 392(3)); only the payment is deferred.