Most start-ups that promise deferred ESOP tax can't give it. If yours can, the company must deduct the tax within 14 days of a date that differs for every tranche. Five answers; you get the gate and the dates.
Only an eligible start-up: a company or LLP incorporated from April 2016 to March 2030, holding the Inter-Ministerial Board certificate of eligible business, with turnover of ₹100 crore or less. DPIIT recognition alone is not enough.
The deferral attaches to the eligible start-up that allots its own shares. On our reading, a parent's or group company's shares get no deferral.
Allotments before 1 April 2026 count 48 months from the end of the assessment year; later ones count 60 months from the end of the tax year. Both land on 31 March five years after the year of allotment, so the date here does not depend on which Act applies.
Counting sixty months from the assessment year's end gives a date a year late — a TDS default.
The company deducts within 14 days of the earliest of: the window ending, the employee selling the shares, or the employee leaving. For a window ending 31 March, that is 14 April.
The tax uses the rates of the year of allotment, on the value fixed then. A later down round does not reduce it.
When an employee leaves, the window closes at once. If no salary is still due, the company must collect the tax from them or pay it itself.
Allotments before 1 April 2020 were never deferrable; the tax was due through payroll in the year of allotment.
The law does not say which year's turnover counts for the deferral. This page applies the ₹100 crore test to the year of allotment, the most natural reading.
The employee shows the deferred tax in the return's ESOP schedule each year until it is paid.
Section 392(3) read with section 289(3) of the Income-tax Act, 2025 (allotments from 1 April 2026); section 192(1C) of the Income-tax Act, 1961 (allotments from 1 April 2020 to 31 March 2026). Eligibility: section 140 (earlier section 80-IAC).
It does not compute the perquisite, the tax or the TDS amount, and it does not give the deposit date. Those come from payroll once the deduct-by date arrives.