ESOPs. What do you actually get?
An ESOP gives you the right to buy shares, not cash in your account. First the right vests. Then, if you choose to exercise it, you pay the strike price and receive shares.
In India, the gap between what you pay and the fair market value at exercise can be taxed as salary. That bill may arrive before you've sold a share. A later sale brings its own capital-gains calculation; a fall in value doesn't undo the earlier salary tax.
- What will I pay? Check the strike price and number of shares.
- What tax will I owe? Budget beyond the purchase cost.
- When can I sell? Check the plan's restrictions and whether there's a buyer.