RSU & ESOP Tax Calculator for Indian Residents

How each figure is worked out

The Income-tax Act, 2025 replaced the Income-tax Act, 1961 from 1 April 2026. Section numbers changed, but the rules below carried over. Each step gives the 2025 Act section first and the 1961 equivalent in brackets.

1. The perquisite, taxed as salary

When RSUs vest and the shares are allotted to you, or when you exercise ESOP options, the value of the shares counts as a perquisite. It is taxed with your salary at your slab rate, and your employer deducts tax at source on it.

Perquisite = (FMV per share on the exercise / allotment date − amount you paid per share) × number of shares

Source: section 17(1)(d), with the value set by section 17(4)(h) (1961 Act: section 17(2)(vi)). For RSUs the amount paid is usually nil. The method for fixing fair market value is prescribed under section 17(4)(a), which is why the calculator asks for the figure your employer used.

2. Your cost when you sell

You are not taxed twice on the same rupee. The FMV already taxed as a perquisite becomes your cost for capital gains.

Capital gain = (sale price per share − FMV per share used for the perquisite) × number of shares

Source: section 73(1), Table, serial number 4 (1961 Act: section 49(2AA)).

3. Short-term or long-term

The holding period runs from the date the shares were allotted or transferred to you, not from the grant date or the vesting schedule. Shares listed on a recognised stock exchange in India are long-term after more than 12 months. Everything else, including unlisted Indian shares and shares listed only abroad, is long-term after more than 24 months.

Source: section 2(101), clauses (a) and (b) for the 24- and 12-month periods, and clause (c)(C)(V) for the start date (1961 Act: section 2(42A)).

4. The rate on the gain

Shares	Short-term	Long-term
Indian listed, sold on an Indian exchange with STT	20% (section 196; 1961: section 111A)	12.5% on gains above ₹1.25 lakh a year (section 198; 1961: section 112A)
Foreign shares, unlisted Indian shares, or listed shares sold without STT	Your slab rate	12.5%, no indexation (section 197; 1961: section 112)

These are the rates set in July 2024 (20% short-term, 12.5% long-term, a ₹1.25 lakh exemption, and the 12- and 24-month holding periods), which the 2025 Act carried over. The Finance Act, 2026 did not change them.

Section 198 also needs STT to have been paid when equity shares were acquired, except for kinds of acquisition the government notifies as exempt (section 198(5)). If your shares do not meet that condition, untick the STT box: the long-term gain is then taxed under section 197 at 12.5% without the ₹1.25 lakh exemption.

5. Cess

Every tax figure includes the 4% Health and Education Cess, levied for tax year 2026-27 by section 3(15) of the Finance Act, 2026. Surcharge is left out.

Worked examples

Each example was computed with the calculator and checked by hand. Tax figures include 4% cess and no surcharge.

RSUs in a US-listed employer, sold after 30 months

100 RSUs vest with an FMV of ₹15,000 a share. You are in the 30% slab. You sell all 100 thirty months after allotment at ₹18,000 a share.

• Perquisite: 100 × ₹15,000 = ₹15,00,000. Tax: ₹15,00,000 × 30% × 1.04 = ₹4,68,000.
• Gain: 100 × (₹18,000 − ₹15,000) = ₹3,00,000. Foreign shares held for more than 24 months are long-term, taxed under section 197 at 12.5%: ₹3,00,000 × 12.5% × 1.04 = ₹39,000.
• Total: ₹5,07,000. Sell after 20 months instead and the gain is short-term at your 30% slab: ₹93,600.

ESOPs in an Indian listed company, sold on the NSE after 18 months

You exercise 1,000 options at ₹200 when the FMV is ₹500. You are in the 30% slab. Eighteen months after allotment you sell all 1,000 on the exchange at ₹800, and you have not used any of this year's ₹1.25 lakh exemption.

• Perquisite: 1,000 × (₹500 − ₹200) = ₹3,00,000. Tax: ₹3,00,000 × 30% × 1.04 = ₹93,600.
• Gain: 1,000 × (₹800 − ₹500) = ₹3,00,000, long-term. Under section 198: (₹3,00,000 − ₹1,25,000) × 12.5% × 1.04 = ₹22,750.
• Total: ₹1,16,350. Sell after 8 months instead and section 196 applies: ₹3,00,000 × 20% × 1.04 = ₹62,400.

ESOPs in an unlisted Indian start-up, sold after 20 months

You exercise 2,000 options at ₹10 when the FMV is ₹110. You are in the 20% slab. Twenty months later you sell all 2,000 to a buyer at ₹300.

• Perquisite: 2,000 × (₹110 − ₹10) = ₹2,00,000. Tax: ₹2,00,000 × 20% × 1.04 = ₹41,600.
• Gain: 2,000 × (₹300 − ₹110) = ₹3,80,000. Unlisted shares need more than 24 months to be long-term, so this is short-term at your slab: ₹3,80,000 × 20% × 1.04 = ₹79,040.
• Total: ₹1,20,640.

What this calculator does not cover

• Start-up deferral. Employees of an eligible start-up (section 140; 1961: section 80-IAC) can defer paying the tax on the perquisite until the earliest of five years from the end of the tax year, the sale of the shares, or leaving the employer (section 289(3), with the matching TDS timing in section 392(3); 1961: sections 156(2) and 192(1C)). This changes when you pay, not how much.
• Foreign shares. Rupee conversion follows prescribed exchange-rate rules, tax withheld abroad may be claimable as a foreign tax credit, and residents must report foreign assets in their return. Get these right with your CA.
• Buybacks, dividends, surcharge, and non-residents. These follow different rules.

Sources

• Income-tax Act, 2025 (full text), Income Tax Department
• ICAI Direct Taxes Committee: Income-tax Act, 2025 including tabular mapping of sections with the Income-tax Act, 1961
• The Finance Act, 2026 (Gazette of India, 30 March 2026)
• PIB: Capital gains taxation simplified and rationalised (Union Budget 2024-25)
• PIB: FAQs issued by CBDT on the new capital gains tax regime (July 2024)