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Tax Treatment of ESOP

Jyoti Malik (ACCOUNTANT) (2644 Points)

19 November 2010

WHAT IS THE TAX TREATMENT OF ESOP SHARES? IS THE COST PAID AT THE TIME OF ESOP IS THE PURCHASE COST? HOW TO COMPUTE CAPITAL GAIN ? PLEASE HELP/////////////////////////

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2 Replies

Hitesh Kothari (Chartered Accountant M.No. - 134239) (326 Points)
Replied 19 November 2010

Dear Jyoti,

With the removal of FBT, ESOP are now taxed as Perq in the hands of Employee.

Difference between FMV on the day of exercise and Cost price paid by Employee is considered as Perq liable to tax under the head Salary.

In future when the same is sold the FMV on the day of exercise (Which was considered as for calculation of Perq) will be taken as Cost price of the Shares.

Regards

Hitesh

2 Like

Sampath (Sr.Software Engineer) (25 Points)
Replied 29 June 2012

Dear Hitesh,

Thanks for posting this information.

On the same FY, if the exercise the ESOPs and also sold my house for loss, is it possible to consider the loss on the propery adjusted againest the Perq gained (paper money) by the ESOP ?

Thanks

-Sampath