ESOP Consultant in Hyderabad: Scheme Design, Valuation and Tax Compliance for GCC, Pharma and Startup Companies

In short: A Hyderabad company needs four things to line up on an ESOP — a scheme that complies with Section 62(1)(b) of the Companies Act, 2013, a valuation from the correct professional for the transaction in question, a tax position that matches the Income-tax Act, 2025, and documentation that survives a funding round, a parent company’s audit, or an IPO readiness review. SEBI itself rewrote part of that picture on 2 January 2026, retiring merchant bankers in favour of independent Registered Valuers for listed-company schemes — a shift that most Hyderabad-focused ESOP guidance published since has yet to reflect.

CA Murli Chandak is an IBBI-Registered Valuer for the asset class Securities or Financial Assets, registration number IBBI/RV/07/2021/14408, and has completed more than 300 valuation assignments across more than 7 countries, including the United States. Hyderabad’s employer base is unusually concentrated around two ESOP-heavy sectors: more than 355 Global Capability Centres employing over 200,000 professionals, and a Genome Valley pharmaceutical and life sciences cluster of more than 200 companies, alongside a sizeable DPIIT-recognised startup base incubated through T-Hub and WE Hub. For each of these groups, the practical questions rarely concern the concept of an ESOP. They concern which professional must sign which certificate, how the December 2025 SEBI change affects a listed or soon-to-be-listed company, and what the perquisite tax actually costs an employee under the rules now in force.

1. Contents

1. Why Hyderabad companies are turning to ESOPs
2. What an ESOP is, in four stages
3. What changed for Hyderabad and Telangana companies in 2026
4. The legal framework: unlisted and listed companies
5. Who values what: registered valuer, merchant banker or chartered accountant
6. ESOP taxation in India: the two-stage framework
7. What this ESOP advisory covers
8. Experience behind Hyderabad engagements
9. Documents needed to start
10. How a Hyderabad engagement runs
11. Common mistakes Hyderabad companies make with ESOPs
12. Frequently asked questions

2. Why Hyderabad companies are turning to ESOPs

Hyderabad’s ESOP demand comes from three distinct employer groups, more so than in most other Indian cities. Global Capability Centres — captive India units of overseas corporations across banking, technology, life sciences and engineering — account for the largest share; JLL’s November 2025 analysis puts the city’s GCC count above 355, employing more than 200,000 professionals and making Hyderabad India’s second-largest GCC hub by leasing volume. A GCC’s Indian leadership and senior technical staff are frequently offered participation in the parent’s global RSU or ESPP programme, which sits alongside — and needs to be reconciled with — any India-specific ESOP pool the local entity runs for employees the global programme does not reach.

The second group is Hyderabad’s pharmaceutical and life sciences cluster, anchored by Genome Valley, home to more than 200 biotech, pharma and life sciences companies from 18 countries across roughly 2,000 acres; Telangana accounts for close to 35 percent of India’s pharmaceutical and bulk-drug production. A number of these companies are listed or preparing to list, which puts the December 2025 SEBI valuer change squarely in scope rather than academic. The third group is Hyderabad’s DPIIT-recognised startup base, incubated substantially through T-Hub and WE Hub, competing for the same senior engineering and product talent as Bengaluru and the National Capital Region.

An ESOP only delivers retention value if the pool is sized correctly, the scheme is compliant from the first grant, and the valuation and tax positions are defensible when a parent-company auditor, a due diligence team or an Assessing Officer eventually looks at them. For a GCC in particular, a compliance gap is often discovered when the Indian entity’s numbers are consolidated into the global parent’s financial statements, not at the local audit.

3. What an ESOP is, in four stages

An Employee Stock Option Plan gives an employee the right, not the obligation, to acquire company shares at a predetermined exercise price after satisfying vesting conditions. No ownership passes at grant — only the right to acquire shares later.

Stage	What happens
1. Grant	The company allots a defined number of options to an eligible employee, recorded in a grant letter that fixes the exercise price and the vesting schedule
2. Vesting	The employee earns the right to exercise once the vesting conditions are satisfied — most often a minimum period of continuous service, sometimes combined with performance conditions
3. Exercise	The employee pays the exercise price for vested options and is allotted shares, which is when the first tax event and the first valuation requirement arise
4. Sale	The employee sells the shares, within whatever lock-in or policy limits the company has set — the second and final tax trigger

4. What changed for Hyderabad and Telangana companies in 2026

Hyderabad’s position in the Ministry of Corporate Affairs’ field-office realignment, effective 16 February 2026, is different from Delhi, Mumbai and Kolkata. Rather than an existing office being split in two, Hyderabad gained an entirely new Regional Directorate, while its Registrar of Companies and NCLT Bench stayed exactly where an earlier, separate realignment had already put them.

The Ministry first notified 10 new Regional Directorates on 23 October 2025 (Notification S.O. 4852(E), under Section 396(1) of the Companies Act, 2013), originally to take effect from 1 January 2026; that effective date was deferred to 16 February 2026 by a further notification, S.O. 6115(E) dated 30 December 2025. The new Regional Director, South-Eastern Region, is headquartered at Hyderabad for the first time and has jurisdiction over four states that were previously split across other directorates.

Office	Jurisdiction from 16 February 2026
Regional Director, South-Eastern Region, Hyderabad (new)	Andhra Pradesh, Chhattisgarh, Odisha and Telangana
Registrar of Companies, Hyderabad	State of Telangana only — unaffected by the February 2026 realignment
Registrar of Companies, Vijayawada	State of Andhra Pradesh — separated from ROC Hyderabad in 2018, also unaffected by the February 2026 realignment
NCLT Hyderabad Bench	State of Telangana only
NCLT Amaravati Bench	State of Andhra Pradesh — a separate bench, confirmed functioning for all purposes under the NCLT President’s order

Source: Ministry of Corporate Affairs, Notification S.O. 4852(E) dated 23 October 2025 (Regional Directorates), as amended by S.O. 6115(E) dated 30 December 2025 (deferred effective date), and PIB release dated 31 December 2025 (field-office realignment effective 16 February 2026).

Unlike Delhi, Mumbai and Kolkata, whose Registrars of Companies were bifurcated as part of the same February 2026 exercise, ROC Hyderabad’s own jurisdiction was fixed earlier and separately: Andhra Pradesh was carved out to a new ROC at Vijayawada in 2018, following the 2014 bifurcation of the two states, leaving ROC Hyderabad covering Telangana alone since then. Several third-party directories still list ROC Hyderabad as covering “Andhra Pradesh and Telangana”, which is out of date. The special resolution and MGT-14 filing that an ESOP scheme approval requires should go to ROC Hyderabad only where the registered office is in Telangana, and to ROC Vijayawada for an Andhra Pradesh registered office. The same state-based split applies to an NCLT-supervised scheme of arrangement involving the ESOP pool: a Telangana-registered company files before the NCLT Hyderabad Bench, and an Andhra Pradesh-registered company before the NCLT Amaravati Bench. Field office jurisdictions are re-notified from time to time, so the correct office for a specific registered office should always be confirmed against the MCA’s own Registrar of Companies directory before a scheme resolution is filed.

For a Hyderabad-headquartered group with an Andhra Pradesh manufacturing or R&D subsidiary — not uncommon in the pharmaceutical sector, given Andhra Pradesh’s own bulk-drug parks — the two entities file with different Registrars and different NCLT benches, though both now fall under the same new Regional Directorate at Hyderabad.

5. The legal framework: unlisted and listed companies

5.1 Unlisted companies

Most Hyderabad ESOP schemes sit inside unlisted private limited companies — true of the great majority of GCCs, pharma subsidiaries and DPIIT startups alike. These schemes are governed by Section 62(1)(b) of the Companies Act, 2013 read with Rule 12 of the Companies (Share Capital and Debentures) Rules, 2014. Rule 12 requires shareholder approval by special resolution, disclosure of the scheme’s material terms to shareholders, and a minimum period of one year between the grant of an option and its vesting. The rule does not itself require a registered valuer’s report at the scheme-approval stage — that requirement arises later, and separately, for financial reporting and for the tax position at exercise.

A Hyderabad GCC whose ultimate parent is listed overseas sits in this same unlisted-company category for its own ESOP pool: where the Indian entity grants options over its own shares rather than the parent’s, the parent’s overseas listing does not change the applicable Indian route. It is a separate question from whether employees also participate in the parent’s own global RSU or ESPP plan, which is governed by the plan document and the securities law of the parent’s home jurisdiction, not by Section 62(1)(b).

5.2 Listed companies

The governing framework for a listed company’s ESOP, restricted stock unit, stock appreciation right or sweat equity scheme is the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 — and this is precisely where the recent change sits. Under the 2021 Regulations as originally framed, either an independent chartered accountant or a merchant banker could value these schemes. That changed with the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) (Second Amendment) Regulations, 2025 (F. No. SEBI/LAD-NRO/GN/2025/284, notified 3 December 2025, effective 2 January 2026): Regulation 2(1)(ww) redefines “valuer” by cross-reference to Section 247 of the Companies Act, 2013, while Regulation 34(1) confines every fresh valuation under the Regulations to an independent Registered Valuer. A nine-month grace window from the 2 January 2026 effective date let merchant bankers finish assignments already in progress.

For a Hyderabad company that has listed, or is preparing to list — several of Genome Valley’s pharmaceutical and life sciences names among them — the valuation of its ESOP or sweat equity scheme is now squarely IBBI-Registered Valuer work, not merchant banker work, a distinction most currently published Hyderabad ESOP content has not caught up with.

6. Who values what: registered valuer, merchant banker or chartered accountant

More Hyderabad ESOP filings stall over the wrong professional signing a certificate than over an actual error in the numbers. The table below sets out which professional applies to each ESOP-related requirement.

Requirement	Who values or signs	Statutory basis
Approval of the ESOP scheme, unlisted company	Special resolution of shareholders; no external valuer required at this stage	Section 62(1)(b) read with Rule 12, Companies (Share Capital and Debentures) Rules, 2014
Valuation for a listed company’s ESOP or sweat equity scheme	Independent Registered Valuer under Section 247, Companies Act, 2013	Regulation 34(1), SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, as amended w.e.f. 2 January 2026
Fair value of options at grant, for financial reporting	Valuation professional applying an option-pricing model such as Black-Scholes	Ind AS 102, Share-based Payment
Perquisite fair market value at exercise, unlisted shares	Category I Merchant Banker registered with SEBI, on the exercise date or a date not more than 180 days earlier	Section 17(1)(d) read with Section 17(5)(h), Income-tax Act, 2025, and Rule 15(6), Income-tax Rules, 2026
Perquisite fair market value at exercise, listed shares	Average of the opening and closing exchange price on the exercise date — no separate valuer required	Rule 15(6), Income-tax Rules, 2026
Tax deducted at source on the perquisite	Employer, at the time of exercise	Section 392, Income-tax Act, 2025

Where a Hyderabad company needs more than one certificate for the same transaction — a listed-company Registered Valuer’s report alongside a Category I Merchant Banker’s tax certificate, for instance — the practical answer is to build both on one consistent set of financial assumptions, so the two documents do not tell a reviewer, or a parent-company auditor, two different stories about the same company. Where a Merchant Banker’s certificate is required alongside a registered valuer’s report, that certificate is issued by a SEBI-registered Category I Merchant Banker within the same coordinated engagement.

One further check is worth making before engaging a Merchant Banker for the unlisted-company perquisite certificate: the SEBI (Merchant Bankers) (Amendment) Regulations, 2025 (F. No. SEBI/LAD-NRO/GN/2025/282, notified 3 December 2025, effective 2 January 2026) restrict fresh valuation engagements to Merchant Bankers who separately hold SEBI registration for valuation-related activities — a Category I registration alone is not automatically sufficient. Confirming this registration before the engagement begins avoids discovering the gap only when the certificate is challenged.

7. ESOP taxation in India: the two-stage framework

ESOPs are taxed at two separate points, and the Income-tax Act, 2025, which took effect from 1 April 2026, renumbered the relevant provisions without changing the underlying framework.

7.1 Stage 1: perquisite tax at exercise

The first tax trigger falls the moment vested options are exercised: the gap between the exercise-date fair market value and the exercise price paid is taxed as a perquisite under the head Salary — Section 17(1)(d) read with Section 17(5)(h) of the Income-tax Act, 2025, worked out under Rule 15(6) of the Income-tax Rules, 2026, with the employer deducting tax at source under Section 392 of the Act.

Worked example. An employee of a Hyderabad company exercises 1,000 vested options at an exercise price of Rs 120 per share, when the fair market value determined by the Category I Merchant Banker is Rs 720 per share.

Taxable perquisite = (Rs 720 − Rs 120) × 1,000 = Rs 6,00,000, added to the employee’s salary income for the year and taxed at the applicable slab rate, with TDS deducted by the employer at the time of exercise.

7.2 Stage 2: capital gains at sale

That same Stage 1 fair market value carries forward as the cost of acquisition for capital gains, which is what stops the value being taxed a second time. The clock on the holding period starts at exercise-date allotment, not at the original grant. Once an unlisted shareholding has been held for more than 24 months it counts as long-term, falling under Section 197 of the Income-tax Act, 2025 — successor to the erstwhile Section 112 — currently a flat 12.5 percent with no indexation benefit.

Continuing the example: the employee sells the 1,000 shares 26 months after exercise at Rs 1,050 per share. Capital gain = (Rs 1,050 − Rs 720) × 1,000 = Rs 3,30,000, taxed as long-term capital gains at 12.5 percent, before cess.

7.3 Deferred taxation for eligible startups

A narrower group can put off paying Stage 1 tax rather than settle it in the exercise year: employees of a DPIIT-recognised startup that also carries the Inter-Ministerial Board certificate under Section 140 of the Income-tax Act, 2025 (successor to the old Section 80-IAC). The deferral window, set by Section 392(3) read with Section 289(3) of the 2025 Act (successor to Section 192(1C)), closes on whichever of the following comes first:

1. 60 months from the end of the tax year in which the shares were allotted, for shares allotted on or after 1 April 2026 — extended from the 48-month window that applied to allotments before that date;
2. the date the employee ceases to be an employee of the company; or
3. the date the employee sells the shares.

Deferral only postpones the cash outflow — it is not a waiver. The liability is still computed at the slab rate in force in the allotment year, and the employer must still calculate and report it even though the payment date moves. The deferral is relevant chiefly to Hyderabad’s T-Hub and WE Hub-incubated startups. A Global Capability Centre is typically a wholly-owned subsidiary of an established overseas parent rather than a DPIIT-recognised startup, so it does not usually qualify for the Section 140 certification, and its employees generally owe the Stage 1 tax in the year of exercise itself.

8. What this ESOP advisory covers

1. Scheme design. Pool sizing, eligibility criteria and vesting structure aligned to the company’s hiring plan and future dilution.
2. Valuation coordination. Grant-date fair value for Ind AS 102 accounting, and coordination with a SEBI-registered Category I Merchant Banker for the exercise-date perquisite FMV where the company is unlisted.
3. Global-plan reconciliation. Aligning an India-specific ESOP pool with a parent company’s existing RSU or ESPP programme, so employees are not confused about which plan governs which grant — a recurring requirement for Hyderabad’s GCCs.
4. Scheme documentation. Board and shareholder resolutions, the ESOP policy document, and individual grant letters consistent with the approved scheme.
5. Cap table modelling. Grants, vesting, exercises, lapses and cancellations tracked against the fully diluted capitalisation table.
6. Compliance calendar. Filing deadlines tied to grant, vesting and exercise events, and to the applicable ROC, Regional Directorate and NCLT bench for the company’s registered office.
7. Employee communication. Plain-language explanation of vesting, exercise, taxation and liquidity so option holders understand what they hold.

9. Experience behind Hyderabad engagements

These credentials are not generic filler for this market. A GCC reconciling its parent’s global RSU or ESPP plan against an India-specific scheme is drawing on valuation experience that already spans more than 7 countries, including the United States. A Genome Valley pharmaceutical or life sciences company preparing for a funding round or an acquisition is drawing on more than 15 purchase price allocations under Ind AS 103. And any Hyderabad company whose ESOP valuation will face a parent-company auditor or a due diligence team is drawing on a track record of assignments defended before Big Four audit teams.

Credential	Detail
Qualification	Fellow Chartered Accountant
Registration	Registered Valuer under Section 247 of the Companies Act, 2013, registered with IBBI for the asset class Securities or Financial Assets, registration number IBBI/RV/07/2021/14408
Experience	More than 8 years in valuation practice
Volume and reach	More than 300 valuation assignments across more than 7 countries, including the United States
Business combinations	More than 15 purchase price allocations under Ind AS 103, and one under ASC 805
Impairment	More than 30 impairment tests under Ind AS 36, and one under ASC 350
Audit scrutiny	Assignments, including purchase price allocations, defended before Big Four audit teams
Funds	Debt and equity valuation for more than 10 Indian funds

10. Documents needed to start

1. Constitutional. Certificate of incorporation, memorandum and articles of association.
2. Capital structure. Capitalisation table, shareholding pattern, and any existing ESOP pool or scheme document.
3. Financial. Audited financial statements for the last 3 years, and the latest management or provisional accounts.
4. Agreements. Existing shareholder, joint-venture or investment agreements that may restrict dilution or require investor consent.
5. Workforce. Proposed grantee list or eligibility criteria, and anticipated hiring plans driving the pool size.
6. Global plan documents. Where applicable, the parent company’s RSU or ESPP plan rules, so the India-specific scheme is drafted consistently with it.
7. Forward-looking. Board-approved business projections supporting the valuation.

11. How a Hyderabad engagement runs

Step	What happens
1	Consultation to establish whether the company is listed or unlisted, and therefore which professionals and which certificates the scheme requires
2	Engagement letter setting out purpose, valuation date, standard applied and scope
3	Information request for the documents in Section 10, issued in tranches so drafting can begin early
4	Pool sizing and vesting structure discussion with founders, the board, or the GCC’s India leadership team
5	Valuation build — grant-date fair value, and coordination with a Category I Merchant Banker for exercise-date FMV where required
6	Draft scheme documents and valuation shared for verification of facts
7	Board and shareholder approval support, followed by signed reports and ongoing administration support

Working with a Hyderabad client from an Ahmedabad-based practice changes nothing about the quality of the file, and every step above runs through document-based workflows and video consultations.

12. Common mistakes Hyderabad companies make with ESOPs

1. Global plan and Indian ESOP treated as interchangeable. A GCC’s assumption that the overseas parent’s RSU or ESPP programme automatically satisfies India’s requirements is incorrect; a separate, Section 62(1)(b)-compliant scheme is still needed for options over the Indian entity’s own shares.
2. Pool sized without a hiring plan. An undersized pool limits future grants; an oversized pool dilutes existing shareholders for no commercial benefit.
3. Tax treated as an afterthought. Employees are frequently surprised by the Stage 1 perquisite tax liability at exercise, which is payable in cash on a non-cash gain — and, for most GCC employees, is not eligible for the startup deferral in Section 7.3.
4. Valuation obtained from the wrong professional. Engaging a merchant banker for a listed-company scheme valuation after 2 January 2026, or an unregistered valuer for a Companies Act purpose, results in a certificate that will not be accepted.
5. Filing with the wrong Registrar. Sending a scheme resolution to ROC Hyderabad for an Andhra Pradesh-registered entity, or vice versa, based on outdated directories that still show a combined Andhra Pradesh-and-Telangana jurisdiction.
6. Cap table not updated in real time. Grants, exercises, lapses and cancellations that are not reflected promptly create confusion at the next funding round or parent-company consolidation.

13. Frequently asked questions

Does an ESOP consultant have to be based in Hyderabad to advise a Hyderabad company?

No. An IBBI Registered Valuer’s registration under Section 247 holds nationally, and most of an ESOP engagement — reviewing documents, building the valuation, drafting the scheme, meeting by video — runs through digital workflows wherever the advisor is based.

Does our GCC’s global RSU or ESPP plan already cover India compliance?

No. A global plan is governed by the parent company’s plan document and its home jurisdiction’s securities law. If the Indian entity itself grants options over its own shares, that scheme still needs separate approval under Section 62(1)(b) of the Companies Act, 2013 and its own valuation and tax treatment in India.

Which Registrar of Companies does a Hyderabad company file with now?

ROC Hyderabad, if the registered office is in Telangana. A registered office in Andhra Pradesh files with ROC Vijayawada instead — a split that has applied since 2018 and was not changed by the February 2026 field-office realignment.

Is a valuation compulsory before an unlisted company launches an ESOP?

Not at the approval stage — Rule 12 does not call for a registered valuer’s report before the scheme itself is approved. A valuation becomes necessary shortly after: for Ind AS 102 accounting when options are granted, and for the Category I Merchant Banker’s perquisite FMV once they are exercised.

Who values an ESOP scheme for a listed company now?

An independent Registered Valuer under Section 247 of the Companies Act, 2013 — that has been the position since the SEBI (Share Based Employee Benefits and Sweat Equity) (Second Amendment) Regulations, 2025 took effect on 2 January 2026. Merchant bankers were permitted to finish only assignments already underway, inside a nine-month transition window.

How is the ESOP perquisite tax calculated?

Take the fair market value on the exercise date, subtract the exercise price actually paid, and multiply by the number of shares exercised — that figure is taxed as salary income under Section 17(1)(d) of the Income-tax Act, 2025.

Can the perquisite tax be deferred?

Yes, for employees of startups holding both DPIIT recognition and the Section 140 Inter-Ministerial Board certificate. The deferral runs for 60 months from the end of the tax year of allotment for shares allotted on or after 1 April 2026, or until the employee leaves or sells the shares, whichever is earliest. This generally does not extend to GCC employees, since a GCC is not usually a DPIIT-recognised startup.

Which NCLT bench hears a scheme of arrangement involving a Hyderabad company’s ESOP pool?

The NCLT Hyderabad Bench for a Telangana-registered company, and the separate NCLT Amaravati Bench for an Andhra Pradesh-registered company.

What documents are needed to start designing an ESOP scheme?

Incorporation documents, the capitalisation table, recent financial statements, existing shareholder agreements, the proposed grantee list or eligibility criteria, board-approved projections, and, for a GCC, the parent company’s global plan documents. A full list is set out in Section 10.

How long does it take to design and launch an ESOP scheme?

Mainly on two things: how quickly the board and shareholders can agree on pool size and eligibility, and how complete the information supplied is. A realistic timeline gets discussed at the initial consultation once the company’s specific facts are known.

14. Speak to an ESOP consultant

If you are designing a new ESOP pool, reconciling a global RSU plan with India’s requirements, valuing an existing scheme, or preparing ESOP documentation for a funding round or IPO readiness review, a short conversation at the outset usually saves considerable rework later. Consultations of up to 30 minutes are offered at no charge.

CA Murli Chandak – FCA | IBBI-Registered Valuer (Securities or Financial Assets) | IBBI/RV/07/2021/14408

Website: murlichandak.com
Phone: +91 99985 39902
Email: murlichandak@murlichandak.com

Statutory positions verified against source on 10 August 2026. Field office jurisdictions, SEBI regulations and Income-tax provisions change from time to time; the position applicable to a specific company should be confirmed before filing. This page is general information on ESOP scheme design, valuation and tax compliance in India and is not advice on any specific transaction. Where a matter requires a legal opinion, specialist legal advice should be taken.

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