Taxation on one time payment for not exercising ESOP

Lokesh (Student) (26 Points)

26 February 2024  

Company offered a one time payment to not exercise ESOPs. At the time of offer and payment, the person had not been employed by the company for > 1 year. He had started freelancing. How will this payment be taxed?

Confused between:

  1. business income
  2. income from other sources
  3. profits in lieu of salary (Salary income head)
  4. others? please suggest!