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ESOP TDS under Section 192 and Form 24Q in Pune

Built for Pune's equity-pay employers, from Hinjewadi SaaS firms and Magarpatta GCC captives to Kharadi startups and Chakan MIDC plants.

Reviewed by CA and CS Team, Patron Accounting LLP ICAI & ICSI Registered| 15+ Years Experience| Last Updated: Verify Credentials →

Documents: perquisite working, TAN, challan, employee PAN and salary data.

Fees: From INR 4,999 (Exl GST and Govt. Charges)

Applies to: every employer deducting TDS on an ESOP exercise event.

Due dates: Q1 31 Jul, Q2 31 Oct, Q3 31 Jan, Q4 31 May.

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Employers and payroll teams trust Patron Accounting to compute ESOP perquisite TDS, file Form 24Q on time and issue a reconciled Form 16 every quarter.

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What This Service Covers

📌 TL;DR - ESOP TDS and Form 24Q Services at a Glance

On an ESOP exercise, the employer must deduct TDS on the perquisite at the employee slab rate under Section 192, report it in Form 24Q each quarter, and issue Form 16. We run that full cycle.

Pune runs on equity pay. From the SaaS and product firms in Hinjewadi and the global capability centres in Magarpatta to the early-stage teams in Kharadi and Viman Nagar, a large share of payroll here includes ESOPs and foreign-parent RSUs. That makes Section 192 withholding on the non-cash perquisite a recurring payroll task, not a one-off. Patron Accounting computes that TDS, files Form 24Q each quarter, and issues a reconciled Form 16 so your Pune payroll passes assessment cleanly.

ESOP TDS is the employer obligation to withhold tax on the ESOP perquisite at exercise. Because the benefit is non-cash, Pune payroll teams, especially GCC captives in Magarpatta withholding on a US or EU parent grant, routinely under-deduct, miss the Form 24Q deadline, or issue a Form 16 that does not reconcile with the employee return. Patron Accounting has run salary-TDS compliance for Indian employers for over 15 years.

What Is ESOP TDS under Section 192

When a Hinjewadi SaaS engineer or a Chakan plant manager exercises stock options, the gain is treated as a salary perquisite, and the employer is the one on the hook for the tax. That tax is ESOP TDS: the withholding an employer makes under Section 192 of the Income-tax Act 1961 on the difference between the fair market value on the exercise date and the exercise price, deducted at the employee's average slab rate in the month the options are exercised. In Pune's product and SaaS ecosystem, where exercises often cluster right after a Series A or a tender offer, a single perquisite can push an engineer past a surcharge threshold, which is exactly why the slab arithmetic cannot be approximated.

Because Form 24Q rolls up every component of salary TDS for the quarter, the ESOP perquisite does not sit in a separate return; it is reported inside the same Form 24Q as the rest of the employee's salary. One change worth flagging for Pune deductors: from 1 April 2026 the Income-tax Act 2025 takes over the identical withholding under Section 392, renaming the quarterly return Form 138 and the certificate Form 130. The compliance flow stays the same; only the section and form labels are renumbered.

Key Terms for ESOP TDS and Form 24Q:

Form 24Q: the quarterly salary-TDS return under Rule 31A, replaced by Form 138 from FY 2026-27.
Annexure II: the Q4-only annual salary breakup that drives Form 16 on TRACES.
Sell-to-cover: selling part of the exercised shares to fund the TDS on a non-cash perquisite.
Section 192(1C): the deferral provision that postpones TDS for eligible startup employees.

Withheld under Section 192

ESOP TDS for Pune Employers

Pune is one of India's deepest equity-compensation markets outside Bengaluru. The Hinjewadi Rajiv Gandhi Infotech Park, the Magarpatta and Kharadi GCC clusters, and the Baner-Balewadi product belt mean a steady flow of ESOP exercises and RSU vests each quarter. Most of these are run by companies registered with the Registrar of Companies (RoC) Pune under the MCA, and the TDS on every exercise still has to be deposited centrally and reported in Form 24Q against your TAN.

Two patterns are common in Pune. First, GCC captives in Magarpatta and Kharadi withhold Section 192 TDS on RSUs granted by a US or European parent, where the Indian subsidiary is the deductor even though the grant originated abroad. Second, DPIIT-recognised startups in Viman Nagar and Koregaon Park use the Section 192(1C) deferral, which needs the IMB certificate under Section 80-IAC, not just DPIIT recognition, to hold valid.

Local example: a Hinjewadi SaaS firm whose 20-engineer cohort exercises in Q2 must add each perquisite to that month's salary, deposit the TDS by 7 October, and report it in the Q2 Form 24Q due 31 October. We size a sell-to-cover so the non-cash benefit does not leave employees with a cash shortfall.

Who This Applies To

If even one of your Pune employees exercises options in a quarter, this obligation is yours. The reporting duty does not scale with headcount, so a Baner bootstrapped startup with a single exercise carries the same Form 24Q responsibility as a Magarpatta GCC running vests across hundreds of staff.

Hinjewadi and Kharadi GCC captives withholding on RSUs or ESOPs granted by a US or European parent.
Viman Nagar and Koregaon Park startups applying the Section 192(1C) deferral for eligible employees.
Chakan and MIDC manufacturing companies and LLPs whose staff exercise listed or unlisted ESOPs.
Payroll and HR teams across the Pune product belt handling Form 16 issuance and reconciliation.

Statutory anchor: under Rule 31A, any employer deducting TDS on salary must file Form 24Q for that quarter. Skip it and Section 234E levies Rs 200 per day, while your employees are left unable to obtain Form 16.

Our ESOP TDS and Form 24Q Services

Service	What We Do
Section 192 Perquisite Computation	For each exercise we work out the slab-rate TDS on the FMV-minus-price gain and fold it into that month's payroll for the employee.
Form 24Q Quarterly Return	We build Annexure I every quarter, add Annexure II in Q4, validate every PAN, and upload the FVU against your Pune TAN.
Sell-to-Cover Sizing	For a non-cash benefit, we calculate exactly how many exercised shares to liquidate so the TDS is funded without leaving the employee short.
GCC and Foreign-Parent RSU Withholding	For Magarpatta and Kharadi captives, we handle Section 192 withholding where the grant comes from a US or European parent.
Section 192(1C) Startup Deferral	For DPIIT and IMB-certified Pune startups, we apply the deferral and monitor the trigger event that ends it.
Form 16 and CPC-TDS Defaults	We pull Form 16 Part A and Part B from TRACES for issue by 15 June, and close out any short-deduction or late-filing default.

Our Process

The Quarterly TDS Cycle in 6 Steps

Whether your exercises sit in a Hinjewadi SaaS office or a Chakan plant, we run the same disciplined Section 192 and Form 24Q cycle each quarter, from the first perquisite working through to a reconciled Form 16.

Step 1

Receive the perquisite working

From your Pune entity's cap table or ESOP tracker, we capture (FMV on exercise minus exercise price) x shares for every employee who exercised.

FMV minus price x shares

Working In 01

Step 2

Compute Section 192 TDS

We fold the perquisite into the employee's salary and withhold at the average slab rate, surcharge and cess included, so a large exercise does not slip a band.

Slab rate Surcharge + cess

TDS Computed 02

Step 3

Deposit the TDS

We deposit the withheld tax through ITNS 281 by the 7th of the next month, with the 30 April window for a March exercise.

ITNS 281 By 7th

Deposited 03

Step 4

File Form 24Q

We lodge Annexure I against your TAN each quarter and attach Annexure II in Q4. From FY 2026-27 the return becomes Form 138.

Annexure I Annexure II (Q4)

Filed 04

Step 5

Generate Form 16

Once all four quarterly returns are accepted on TRACES, we pull Part A and Part B for each Pune employee.

Part A + B From TRACES

Generated 05

Step 6

Issue and reconcile

We hand over Form 16 by 15 June only after confirming it ties out to Form 12BA and the employee's Form 26AS, so no notice follows.

By 15 June Matches 26AS

Reconciled 06

Documents Checklist

To turn around your Pune quarter cleanly, we ask for the following before the deposit date:

A per-employee perquisite working showing the exercise date and the FMV source (a merchant-banker valuation for unlisted shares, the exchange price for listed).
Your Pune entity's TAN and TRACES login.
Employee PANs and the monthly salary data for the quarter.
ITNS 281 challan details for the TDS already deposited.
For a Hinjewadi or Viman Nagar startup taking the deferral, the DPIIT recognition and the IMB certificate under Section 192(1C).
Acknowledgements for any 24Q already filed earlier in the financial year.

Where Pune payroll teams get caught out

The ESOP gain is a non-cash perquisite, so there is no cash salary outflow to net the TDS against. The employer has to either recover the tax directly from the employee or fund it through a sell-to-cover, and still capture it in the correct quarter's Form 24Q. A Chakan manufacturer running a one-off exercise often misses this, since its regular payroll has no such mechanism.

Common Challenges and How We Solve Them

Challenge	Impact	How Patron Accounting Solves It
Slab miscalculation on a large Hinjewadi exercise	Section 201 interest at 1% or 1.5% per month	We run the correct average-slab TDS with surcharge and cess before the deposit date, so under-deduction never arises.
Non-cash perquisite with no salary to deduct against	Funding shortfall for the employee	We design a sized sell-to-cover or a direct employee recovery so the TDS is funded and deposited on time.
Annexure II not tying out to the employee Form 26AS	Employee notices at ITR time	We reconcile Annexure II, Form 12BA and Form 26AS before any Form 16 leaves the building.
Chakan or MIDC plan deeds still quoting the old section numbers	Stale references post-April 2026	We refresh the documents for the Income-tax Act 2025 renumbering (192 to 392, 24Q to 138, 16 to 130).

ESOP TDS and Form 24Q Fees

Fee Component	Amount
Patron Accounting Professional Fees	From INR 4,999 (Exl GST and Govt. Charges)
Scope of the starting fee	Section 192 computation, the quarterly return, and challan reconciliation
Form 16 issuance and Section 192(1C) deferral	Quoted on scope

All fees and charges listed are indicative only and do not constitute a binding offer. Final amounts may vary depending on the volume of work and the complexity involved.

Professional service charges for drafting, filing, and representation are separate from the statutory fees. The exact fee depends on the complexity of the case, disputed amount, and number of hearings required. Contact us for a detailed quote.

Get a free ESOP TDS and Form 24Q consultation - Call +91 945 945 6700 or WhatsApp us. No-obligation assessment.

Time Taken

Stage	Estimated Timeline
Quarterly Form 24Q prepared and filed (clean data)	2 to 4 working days before the due date
TDS deposit	By the 7th of the following month

Share exercise data as soon as the exercise happens, since the TDS must be deposited by the 7th of the following month and reported in that quarter's Form 24Q.

Key Benefits

Why Use a Professional

Precise slab withholding

Exact average-slab TDS on the non-cash ESOP perquisite, so a big Pune exercise never draws Section 201 interest.

Filed before the deadline

Form 24Q lodged ahead of every quarterly due date, keeping you clear of the Rs 200 per day Section 234E fee.

Notice-proof Form 16

A Form 16 that already ties out to Form 12BA and Form 26AS, sparing your engineers notices at ITR time.

Ready for Act 2025

Your plan deeds and filing templates refreshed for the Income-tax Act 2025 renumbering before it takes effect.

Trusted by Employers and Payroll Teams

10,000+ Businesses | 4.9 Google Rating | 50,000+ Documents Processed | 15+ Years

Patron Accounting LLP is a CA and CS firm with 15+ years running payroll TDS and equity-compensation withholding for Indian employers.

With offices in Pune, Mumbai, Delhi and Gurugram, Patron Accounting serves businesses across India, both in-person and remotely.

In-House vs Professional Filing

Aspect	In-House Payroll	Patron Accounting
Non-cash perquisite TDS	Often under-deducted	Slab TDS with sell-to-cover planned
24Q timeliness	Deadline pressure, late fees	Filed before due date, every quarter
Form 16 accuracy	Mismatch with 26AS	Reconciled before issue by 15 June
Act 2025 renumbering	Old form names linger	Templates updated to 392 / 138 / 130
Default resolution	Reactive	CPC-TDS defaults handled end to end

Legal and Compliance Framework

One distinction trips up Pune founders most often: ESOP TDS is a central income-tax obligation filed in Form 24Q against your TAN on TRACES, entirely separate from the corporate-law side of an ESOP, where a Pune company files MGT-14 and PAS-3 with the RoC Pune on MCA21. The provisions below govern only the withholding and reporting half that this page covers.

Governing provision: Section 192 of the Income-tax Act 1961 requires the employer to deduct TDS on salary, including the ESOP perquisite. From 1 April 2026, Section 392 of the Income-tax Act 2025 carries the same obligation.

Return: Rule 31A requires Form 24Q each quarter (Form 138 from FY 2026-27), with Annexure II in Q4 driving Form 16 (Form 130).

Deferral: Section 192(1C) (Section 392(3) from FY 2026-27) defers TDS for employees of eligible startups certified under Section 80-IAC, now Section 140 of the 2025 Act.

Penalty exposure: late filing attracts Rs 200 per day under Section 234E, capped at the TDS amount; short or late deduction attracts interest of 1 percent or 1.5 percent per month under Section 201.

Authoritative sources: the Income Tax Department / TRACES, the Income-tax Act and Rules, Protean (TIN) e-TDS, and DPIIT / Startup India (80-IAC).

How does an employer deduct TDS on an ESOP perquisite?

The employer adds the ESOP perquisite (FMV on exercise minus exercise price, times shares) to the employee salary and deducts TDS at the average slab rate under Section 192, including surcharge and cess. Because the benefit is non-cash, the employer either recovers the tax from the employee or runs a sell-to-cover, then deposits the TDS by the 7th of the next month.

What are the Form 24Q due dates?

Form 24Q is filed quarterly under Rule 31A: Q1 (Apr to Jun) by 31 July, Q2 (Jul to Sep) by 31 October, Q3 (Oct to Dec) by 31 January, and Q4 (Jan to Mar) by 31 May. From 1 April 2026 the return is Form 138, but these due dates remain unchanged. Late filing attracts Rs 200 per day under Section 234E.

Does a Pune GCC withhold TDS on RSUs granted by a foreign parent?

Yes. For GCC captives in Magarpatta, Kharadi or Hinjewadi, the Indian subsidiary is the deductor even when the RSU or ESOP grant comes from a US or European parent. The perquisite is the FMV on vesting or exercise minus the amount paid, added to salary, and TDS is withheld under Section 192 and reported in Form 24Q against the Pune entity TAN.

Is the ESOP perquisite reported in Form 24Q?

Yes. The ESOP perquisite is part of salary, so it is reported in Form 24Q along with regular salary TDS. The detailed annual breakup, including the perquisite, is filed in Annexure II in the Q4 return, which then drives the Form 16 issued to the employee.

When is Form 16 issued for ESOP TDS?

Form 16 is issued by 15 June following the financial year. Part A is auto-generated on TRACES once all four Form 24Q returns are accepted, and Part B carries the salary and perquisite breakup from Annexure II. From FY 2026-27, Form 16 is replaced by Form 130 under the Income-tax Act 2025.

Can a Viman Nagar or Koregaon Park startup defer ESOP TDS?

Yes, if it qualifies. Under Section 192(1C), a Pune startup needs both DPIIT recognition and an IMB certificate under Section 80-IAC to defer TDS to the earliest of 48 months from the end of the relevant assessment year, the date of sale, or cessation of employment. DPIIT recognition alone is not enough, so we verify the IMB certificate before applying the deferral.

What happens if ESOP TDS is not deposited on time?

If the TDS is not deposited on time, interest of 1 percent or 1.5 percent per month applies under Section 201, and late filing of Form 24Q attracts a fee of Rs 200 per day under Section 234E.

Which RoC and jurisdiction applies to ESOP filings for Pune companies?

Pune companies are registered with the Registrar of Companies (RoC) Pune under the MCA for corporate filings, while ESOP TDS is a central income-tax obligation filed in Form 24Q against your TAN through TRACES, not the RoC. We handle the Section 192 computation and quarterly return for employers across Hinjewadi, Magarpatta, Kharadi and Baner, in person and remotely.

Quick Answers

Who deducts TDS on ESOP perquisite? The employer deducts it as salary TDS under Section 192.
Which TDS return reports it? It is reported in Form 24Q (replaced by Form 138 from FY 2026-27).
What are the quarterly filing due dates? The Form 24Q due dates are 31 July, 31 October, 31 January and 31 May.
By when must the TDS be deposited? The deducted TDS must be deposited by the 7th of the following month.
Which TDS certificate is issued to employees? Employees receive Form 16 by 15 June (replaced by Form 130 from FY 2026-27).

Why Timing Matters

TDS on an ESOP exercise must be deposited by the 7th of the next month and reported in that quarter's Form 24Q. A missed deposit triggers Section 201 interest, and a late return triggers a Rs 200 per day fee under Section 234E. File early, before the quarter closes.

Get Your ESOP TDS Filed

ESOP TDS under Section 192 and Form 24Q is a recurring, per-exercise obligation that exposes employers to interest and late fees when the non-cash perquisite is mishandled.

Patron Accounting LLP, a CA and CS firm with 15+ years of payroll-TDS experience, computes the withholding, files Form 24Q on time, and issues a reconciled Form 16, keeping both employer and employee compliant.

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Content Created: 24 June 2026 | Last Updated: | Next Review: 24 September 2026 | Reviewed By: CA & CS Team, Patron Accounting LLP

This page is reviewed every three months for Income-tax Act 2025 form and section notifications, the Form 24Q to 138 transition guidance, due-date or TDS-rate changes, 80-IAC (Section 140) amendments, and Budget updates (Tier 1 freshness).