It depends entirely on the deal, so read the term sheet and your ESOP plan closely. Vested options are usually cashed out at the agreed per share price minus your strike, or converted into options in the acquirer. Unvested options may be cancelled, accelerated, or rolled over, and some plans have single or double trigger acceleration that vests you faster on a change of control. The uncomfortable truth is the acquirer sets the terms, and employee options are often treated worse than investor preferred shares when a liquidation preference stack sits ahead of you. Any cash you receive is typically taxed, and in India ESOP gains can be treated as a perquisite or as capital gains depending on the structure and timing. Rules and rates change, so confirm the exact tax treatment of your specific deal with a CA before you count on a number.
3 resources, 1 India-specific, 2 link-checked.
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 →A plain-language India primer on what an ESOP actually is, how vesting and exercise work, and how it is taxed.
From ClearTax by ClearTax
Open cleartax.in →A working glossary of the words on your cap table, from the company that stores most of them, so the jargon stops getting in the way.
From Carta by Carta
Open carta.com →The same ground, over in Raise money, our Starting Up track.
