1. What is ESOP Taxation?

ESOP (Employee Stock Ownership Plan) taxation in India considers the difference between the Fair Market Value (FMV) of shares at exercise date and the exercise price as perquisite value, which is taxable under 'Income from Salaries'.

2. How Does the Calculator Work?

The calculator uses the formula:

Where:

• \( Perquisite \) — Difference between FMV and exercise price (INR)
• \( Slab\ Rate \) — Applicable income tax rate based on total income

Explanation: The perquisite value is added to your salary income and taxed according to your applicable income tax slab.

3. Importance of ESOP Tax Calculation

Details: Accurate ESOP tax calculation helps in financial planning and ensures compliance with Indian tax laws. It helps employees understand their tax liability when exercising ESOPs.

4. Using the Calculator

Tips: Enter the perquisite value (difference between FMV and exercise price) in INR and select the applicable tax slab based on your total income.

5. Frequently Asked Questions (FAQ)

Q1: When is ESOP taxed in India?
A: ESOPs are taxed at two stages - at exercise (perquisite value) and at sale (capital gains).

Q2: How is perquisite value calculated?
A: Perquisite value = (FMV at exercise date - exercise price) × number of shares.

Q3: What are the slab rates for FY 2023-24?
A: 5% for income up to ₹2.5L, 20% for ₹2.5L-5L, 30% above ₹5L (plus cess and surcharge if applicable).

Q4: Can I claim deductions on ESOP tax?
A: Standard deductions like Section 80C may apply to your total income, but not specifically to ESOP tax.

Q5: Is TDS deducted on ESOP perquisite?
A: Yes, employers typically deduct TDS under Section 192 when the perquisite is part of your salary.