Work out stock option tax (esop) instantly with clear inputs, formula shown and shareable results.
On exercise, the gap between fair value and exercise price is taxed as salary, whether or not you sell. The fair value then becomes your cost basis, so subsequent appreciation is taxed as a capital gain instead.
Option perquisite
Perquisite = (fair value - exercise price) × shares, taxed as salary at exercise
Tax figures are estimates based on the rates, caps and thresholds you enter. Real rules differ by jurisdiction and change every year, and personal circumstances alter the outcome. This is not tax or financial advice — confirm with a qualified adviser.
Because the benefit crystallises on exercise. This is the classic cash-flow trap with unlisted shares.
You have already paid salary tax on the higher value, and the fall becomes a capital loss with limited offset.