Equity · component
Phantom stock and stock appreciation rights
Cash-settled equity plans are ordinary salary, not share perquisites — taxed in full when paid.
How the taxable value is determined
Because no shares are issued, there is no perquisite valuation and no capital gains treatment: the entire payout is salary income taxed at slab rates in the year of receipt.
Regime availability
- Old regime
- Prescribed value applies
- New regime
- Prescribed value applies
Documentation to keep
Plan document and the payout computation.
Legal basis: Section 17(1), Income-tax Act
Frequently asked questions
Is phantom stock and stock appreciation rights taxable in India?
Cash-settled equity plans are ordinary salary, not share perquisites — taxed in full when paid. Because no shares are issued, there is no perquisite valuation and no capital gains treatment: the entire payout is salary income taxed at slab rates in the year of receipt.
Does the exemption apply under the new tax regime?
Under the old regime this treatment is not applicable — the value is prescribed, not exempted; under the new regime it is not applicable — the value is prescribed, not exempted. Legal basis: Section 17(1), Income-tax Act.
What records should I keep for phantom stock and stock appreciation rights?
Plan document and the payout computation.
Related tools & guides
Reflects provisions in force for FY 2026-27; verify against the latest government publications (incometax.gov.in). Information, not tax advice.