Usually yes, and this catches people out. In India, exercising ESOPs is itself a taxable event: the gap between the fair market value on the exercise date and your strike price is treated as a perquisite and taxed as salary income, even though you have not sold anything or received any cash. A later sale is taxed again, as capital gains on the growth from exercise to sale. Eligible DPIIT-recognised startups can defer the perquisite tax, which changes the math a lot. The exact numbers are specific to your case, so treat this as the shape of the problem and confirm with a CA before you exercise.
A curated summary to orient you, not advice. The resources below are the real value.
2 hand-picked resources, 1 India-specific, 2 link-checked. Pick how you want to dig in.
Why we picked it The India-specific piece: perquisite tax at exercise, capital gains at sale, and the startup deferral, with worked examples in rupees.
From ClearTax by ClearTax
Open cleartax.in →Why we picked it The most thorough plain-language reference on vesting, cliffs, strike prices, and exercise windows. Read it once and stop being confused by your grant letter.
From Holloway by Holloway
Open holloway.com →The same ground, over in Raise money, our Starting Up track.
