Budget 2026: Tax Experts Demand Clarity on Cross-Border ESOP Taxation

• Tax experts are urging the government for clear guidelines on taxing Employee Stock Ownership Plans (ESOPs) for professionals working across different countries.
• The current tax framework for ESOPs in India taxes them as perquisites based on the difference between Fair Market Value (FMV) and exercise price upon exercise.
• A major challenge arises for cross-border employees as the law lacks specific rules for apportioning ESOP income earned while working partly overseas, leading to disputes.
• Inconsistent tax assessments often attribute the full ESOP gain to India, even when significant service periods were spent abroad, as highlighted by Deloitte.
• Experts recommend administrative guidance from the Central Board of Direct Taxes to establish clear allocation methods and documentation norms, reducing litigation and uncertainty.

Why It Matters: Budget 2026 must clarify cross-border ESOP taxation to reduce disputes and provide certainty for global professionals.