New Delhi, July 31 -- Employee Stock Option Plans (ESOPs) have become a common feature of compensation packages, particularly for corporate technology companies, start-ups and new-age businesses.

These options allow employees to purchase company stock at a predetermined price and benefit from potential growth in the company's valuation. However, ESOP taxation can be complex, as tax liability may arise at different levels.

For all eligible taxpayers filing their Income Tax Return (ITR) today for the assessment year (AY) 2026-27, it is important to understand how ESOP income is reported to ensure accuracy, timeliness and compliance in income tax reporting.

ESOPs are generally not taxed when they are granted or vested. The tax aspect occu...