ESOP related query

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Vikrant

95 Points Posted on 06 August 2025

Hello Friends,

I have received RSU stocks from my company listed in Ireland, some stocks were released this financial year. I can see entry in my Form 16 and company has deducted TDS on the same. I have below queries on the same:

Do I need to declare these stocks in Tax deferred on ESOP? (Assume no since this is not a startup organisation)
Do I need to declare the entire stock balance including the RSU and ESOP in Schedule FA A3? or is A3 only related to the interest I am bit confused here.
Also the broker (UBS) where the shares are hold have withdrawn taxes in host country (Ireland) while the shares were released. How do I mention this withhold tax and declare it in our ITR?

Any guidance would be helpful.

Replies (2)

Quick Summary

This discussion addresses queries regarding the taxation of RSUs and ESOPs for individuals, particularly concerning foreign-held stocks and Irish tax deductions. It clarifies that RSUs from non-startup companies are generally not tax-deferred under ESOP rules and explains how to declare stock balances and withheld taxes in your ITR. The guidance also details the two-stage taxation process for ESOPs in India: perquisite at exercise and capital gains at sale, including relevant ITR forms and the need to report foreign assets.

Rama chary Rachakonda

Master in Accounts & high court Advocate

9620 Points Posted on 12 August 2025

Since the company is not a startup organization, you generally wouldn't treat these RSU stoks as tax-deferred under ESOP.

Schedule A3 typically pertains to income from savings and investments. You might need to report the RSU stocks in a manner consistent with other income reporting in your tax return, but specifics can depend on Irish tax rules for RSUs. Generally, you'd report income from RSUs when they are considered taxable income (often at vesting if taxed as income).

You should report the taxes withheld by UBS in Ireland in your tax return as per Irish tax guidelines. You might need to claim credit for taxes withheld in Ireland against your tax liability in your country of residence, depending on tax treaties between Ireland and Your country of residence.

Tax Garden

Tax Consultant

1627 Points Posted on 15 July 2026

ESOP taxation in India has two separate tax events, and both need to be reported in the ITR.

Stage 1 , Perquisite at exercise: When you exercise your stock options (convert options to shares), the difference between the Fair Market Value (FMV) of the shares on the exercise date and the exercise price is taxed as salary income under Section 17(2). This is a perquisite. Your employer deducts TDS on this and reflects it in Form 16 under perquisite income. It goes in Schedule S (Salary) of ITR-2 or ITR-3.

Stage 2 , Capital gains at sale: When you sell the shares received through ESOP, the difference between the sale price and the FMV on exercise date (your cost of acquisition) is capital gains. Holding period is calculated from the exercise date, not grant date. For listed equity shares held more than 12 months: 12.5% LTCG under Section 112A (Rs 1.25 lakh exempt). For less than 12 months: 20% STCG under Section 111A.

ITR form: ITR-2 works for most salaried ESOP holders (salary income + capital gains). ITR-3 only needed if you have business income in addition.

For foreign company ESOPs (MNC employees): you also need Schedule FA (Foreign Assets) to disclose the foreign shares, and Form 67 if TDS was deducted in the foreign country.

This [ESOP taxation guide for AY 2026-27](https://taxgarden.in/blog/esop-stock-options-taxation-india-ay-2026-27) covers both stages with examples and ITR schedule references.