ESOPs from a US or UK parent company — taxed twice, at exercise and at sale
At exercise the difference between fair market value and the exercise price is a salary perquisite, taxed at slab rates through the employer's TDS — unless the employer is a DPIIT-recognised startup, in which case Section 192(1C) defers the TDS by up to five years. At sale the difference between the sale price and that fair market value is a capital gain: long-term after 24 months for unlisted foreign shares, taxed at 12.5%. The foreign shares must appear in Schedule FA of the return for every year they are held, and a resident who omits them faces a penalty of up to ₹10 lakh under the Black Money Act unless the aggregate value is within ₹20 lakh. Most Rajpath-corridor executives have both problems at once; we handle the computation, the Form 67 foreign tax credit and the Schedule FA disclosure together.
ESOP taxation and TDS deferral