I worked for a startup for 5 years, so at the time of joining and every year during appraisal few shares were granted. After quitting the company in March 2018, I bought all of the vested shares in April 2018. There was a grace period of 3 months to exercise the stocks, so I made use of that period to buy the stock. Assume that stock is granted to me at price X and now the Fair Market Value of the same stock is Y (Y > X). Do I need to consider the difference in FMV and grant price ((Y - X) * number of stocks exercised) as income from other sources and pay tax accordingly on this? Just note that ideally profit is in theory, no money is credited to my account.
I met two CAs and they have different views:
i) If you purchase/exercise the stock when you are in the company, the transaction is a perquisite and company is liable to pay the tax and hence deducts the same from your salary. But after you quit the company, you are just investing in that stock and hence advised me to not to pay any tax now, only when you sell the stock calculate the capital gains tax and pay
ii) Other one has a different opinion and showed me clause 56(2)(x) of Income tax act and said you need to consider it as income from other sources even though no monetary gains (no amount reflcted in bank account) are seen and pay the amount by Jun 15th as advance tax.
It will be greatly helpful for me if anyone can resolove my query.
CAclubindia
