Ask one question of the plan document: does this end with me owning shares, or receiving money? Share-settled awards are taxed twice and have a holding period. Cash-settled awards are salary in full. Company naming is inconsistent enough that the label on your grant letter is not reliable evidence either way.

An option is a right to buy at a fixed price, and you choose when to exercise. A restricted unit converts to a share automatically on vesting, costs nothing, and gives you no choice. The tax treatment is the same shape; what differs is that options let you pick the year the tax falls due and units do not.

Yes, as a perquisite in the year you buy. It feels like a saving because you paid less than market, but the gap between what you paid and the market price is treated as employment income at your slab rate. The cheaper the purchase, the larger the tax.

A purchase plan feature that prices your shares off the lower of two dates, usually the start and end of the offering period. It gets you a better price, which means a bigger discount, which means a bigger perquisite. Favourable economically, more taxable.

Not where they settle in cash, which is how most Indian plans are written. You receive money equal to the appreciation, and the whole amount is salary at your slab rate. There is no share, no holding period and no long-term rate to wait for.

No. It is a cash bonus that tracks a share price. You never own anything, so the entire payout is salary. It is also the one instrument here with no foreign asset reporting attached, because there is no asset.

Tax treatment is worse, but that is not the whole comparison. Cash-settled awards carry no market risk after payout, need no brokerage account, involve no currency exposure and require no reporting. What you lose in rate you gain in simplicity, and for smaller amounts that can be the better trade.

No, for any of these. It starts at settlement — exercise for options, vesting for units, purchase for a plan. Options granted years ago and exercised last week give you shares held for a week.

Options are the only instrument here where you control the timing, which makes it a genuine decision rather than a fact to accept. The tax falls due at exercise whether or not you sell, so the constraint is usually cash rather than strategy. Exercising in a lower-income year helps; exercising without a plan to fund the bill does not.

No. Vesting is automatic and the tax follows it. This is the most common misunderstanding carried over from options, and people plan around a choice they do not have.

The principle is identical across all three share-settled instruments: your cost is the fair market value already taxed as perquisite, not what you paid. What differs is the date that value is measured on — exercise, vesting or purchase.

Only the share-settled ones, and only where the issuer is overseas. If you hold shares in a foreign parent, they belong in Schedule FA once you are ordinarily resident. A cash-settled award pays out and leaves no asset behind to report.

Uncommon, but worth thinking through carefully if it happens. Share-settled gives a lower rate on the growth and concentrated exposure to a single company that also pays your salary. Cash-settled gives certainty, no admin and a higher rate. Neither is obviously right, and the answer depends more on your appetite for that concentration than on the tax.

The shape does not, but the valuation does. An unlisted company's fair market value comes from a merchant banker's valuation rather than an exchange price, and the holding period for long-term treatment is twenty-four months rather than twelve. Illiquidity also means you may owe tax on shares you cannot readily sell.

Common at larger companies — options for senior grants, units for annual refreshers, a purchase plan alongside. Track each tranche separately, because each carries its own settlement date, its own cost and its own holding period clock. Merging them in one spreadsheet is how errors start.

The deferral applies to the perquisite on share-settled awards from eligible startups. Cash-settled awards are salary and fall outside it. The eligibility conditions are narrow enough that most people who ask do not qualify, which is covered on its own page.

Read the plan document for the settlement mechanic, the settlement date and whether you pay anything. Those three facts determine your entire tax position, and all three are in the document even when the covering letter is vague about them.