ESOP Salary vs Capital Gain

1. Correct.

2. Actually there would tax liability at the time of exercise of ESOP, which can be deferred till 5 years.

Originally posted by : Eswar Reddy S
	But company deducted huge tax under perquisites ( salary).Can we get refund if it is deferred?

Yes, if anything in excess. But there would be huge liability of tax under 'Salary'. So check form 16 and act accordingly.

The TDS gets deducted based on Tax liability only. So, Huge income.... Huge TDS.... after all it need to to be adjusted against tax liability & if excess, claim refund...

Yes, but it would be tax liability, even after adjusting TDS. This liability in case of  eligible startups has been deferred.

• Budget 2020 amendment – From the FY 2020-21, an employee receiving ESOPs from an eligible start-up need not pay tax in the year of exercising the option. The TDS on the ‘perquisite’ stands deferred to earlier of the following events:
  • Expiry of five years from the year of allotment of ESOPs
  • Date of sale of the ESOPs by the employee
  • Date of termination of employment

Yes, need to pay the balance tax, if any, in the previous year of exercising option.

Company has deducted TDS as per slab rate of its employee.

Now while filing ITR there can be additional tax liability over the aggregate income, or there can be refund; depends upon his/her other income declarations.