Advance Tax Calculation in case of sale of RSU and ESPP

“𝘐 𝘳𝘦𝘤𝘦𝘯𝘵𝘭𝘺 𝘴𝘰𝘭𝘥 𝘴𝘰𝘮𝘦 𝘰𝘧 𝘮𝘺 𝘙𝘚𝘜𝘴 𝘢𝘯𝘥 𝘌𝘚𝘗𝘗𝘴. 𝘛𝘩𝘦 𝘱𝘳𝘰𝘧𝘪𝘵 𝘸𝘢𝘴 𝘨𝘳𝘦𝘢𝘵, 𝘣𝘶𝘵 𝘯𝘰𝘸 𝘐’𝘮 𝘸𝘰𝘳𝘳𝘪𝘦𝘥—𝘐 𝘥𝘪𝘥𝘯’𝘵 𝘤𝘰𝘯𝘴𝘪𝘥𝘦𝘳 𝘱𝘢𝘺𝘪𝘯𝘨 𝘢𝘥𝘷𝘢𝘯𝘤𝘦 𝘵𝘢𝘹!”

𝐓𝐡𝐢𝐬 𝐬𝐜𝐞𝐧𝐚𝐫𝐢𝐨 𝐢𝐬 𝐜𝐨𝐦𝐦𝐨𝐧. With more companies offering Restricted Stock Units (RSUs) and Employee Stock Purchase Plans (ESPPs), employees often focus on the financial benefits and forget the tax implications.

Here’s the crucial part: when you sell RSUs or ESPPs, it’s not just about enjoying the profits. You need to be mindful of the tax that comes with it. In India, the income generated from the sale of these stocks is considered capital gains.

If your total tax liability exceeds Rs. 10,000 in a financial year, you’re required to pay advance tax. RSUs and ESPPs can significantly bump up your taxable income, and if you don’t pay advance tax, penalties can follow.

Advance tax means paying your taxes in installments throughout the year based on your income. The government expects you to pay it as you earn, covering not only salary income but also additional earnings from things like RSU and ESPP sales.

Calculate Capital Gains: Determine your sale price and purchase price using proper TTBR rates to compute gains.

Connect with the best CA in India that is CA Pranay Bafna for RSU and ESPP taxation.

Check Your Tax Liability: See if your total liability exceeds Rs. 10,000.

Pay Advance Tax: If it does, make sure to pay advance tax within the deadlines.

𝐃𝐞𝐚𝐝𝐥𝐢𝐧𝐞𝐬 𝐟𝐨𝐫 𝐀𝐝𝐯𝐚𝐧𝐜𝐞 𝐓𝐚𝐱:

June 15 – Pay 15% of your total liability

September 15 – Pay 45% of your total liability

December 15 – Pay 75% of your total liability

March 15 – Pay 100% of your total liability

"𝐘𝐨𝐮 𝐜𝐚𝐧 𝐬𝐚𝐯𝐞 2-3% 𝐨𝐧 𝐲𝐨𝐮𝐫 𝐭𝐚𝐱𝐞𝐬 𝐛𝐲 𝐩𝐚𝐲𝐢𝐧𝐠 𝐭𝐡𝐞 𝐫𝐢𝐠𝐡𝐭 𝐚𝐦𝐨𝐮𝐧𝐭 𝐨𝐟 𝐚𝐝𝐯𝐚𝐧𝐜𝐞 𝐭𝐚𝐱—𝐧𝐨 𝐢𝐧𝐭𝐞𝐫𝐞𝐬𝐭, 𝐧𝐨 𝐩𝐞𝐧𝐚𝐥𝐭𝐢𝐞𝐬, 𝐣𝐮𝐬𝐭 𝐬𝐦𝐚𝐫𝐭 𝐭𝐚𝐱 𝐩𝐥𝐚𝐧𝐧𝐢𝐧𝐠 𝐭𝐡𝐚𝐭 𝐤𝐞𝐞𝐩𝐬 𝐦𝐨𝐫𝐞 𝐦𝐨𝐧𝐞𝐲 𝐢𝐧 𝐲𝐨𝐮𝐫 𝐩𝐨𝐜𝐤𝐞𝐭!"

If you’ve sold RSUs or ESPPs this year, don’t forget to calculate your gains and pay advance tax. This simple step can save you from future penalties!