Hi All,
ESOP and RSUs are very common these days. The tax treatment for such shares is also slightly different as the difference between market value and allotment/ offer price is treated as perquisite and taxed as salary of an employee. Further any sale of shares is taxed at the difference between Sale price and the market value at the time of allotment.
Now my query is for a slightly different scenario. My client had exercised his rights to buy RSUs from his employer well within the vesting period. However, the day he exercised his rights, same day he sold off the shares. Actually he says that his Broking firm sold off the 30% of the RSUs that were offered to him every quarter and for which he duly exercised his right. This 30 % he says was sold off to pay off the taxes. The difference between the market price and allotment/ grant price was duly taxed as perks in his Form 16.
In my opinion the subsequent sale of shares (even though made on the same day of the granting) should be taxed under capital gains as difference between market value and sale price. Even if no gain is made in the transactions, the same need to be disclosed in the income tax return.
But the client is adamant that his broking firm has clearly stated that he need not pay any capital gains tax. and hence he is not interested in disclosing his capital gain/ loss transactions in his ITR.
Could anyone please provide me a satisfactory reply/ opinion to this query? Should capital gains / loss on subsequent sale of ESOPs/ RSUs on the same day as of the grant not be disclosed in the ITR?
Thanks in advance.
Nupur
CAclubindia
