Income Tax 2 November 2026
Reforming ESOP Tax to Boost Startups
India's current ESOP tax framework places a heavy burden on employee shareholders, discouraging participation in equity programmes and stifling startup growth. Experts argue that aligning tax incentives with market realities could revive investor confidence and support capital formation on both Dalal Street and the broader startup ecosystem.
India's ESOP tax rules are seen as a drag on employee ownership and startup funding. Critics say the high tax hit on stock‑option gains makes equity compensation unattractive, limiting talent attraction and capital inflow.
- High tax rates on ESOP gains deter employees from exercising options.
- Startup financing suffers as investors shy away from diluted equity structures.
- Policy reform could lower rates or introduce exemptions, spurring participation and growth.
Read the full commentary here.
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