ESOP

Everything about Employee Stock Options Plans (ESOPs)

Income Tax - Almost all of you must have heard the stories of many drivers, office assistants and secretaries of Infosys becoming millionaire. This all could become possible due to a system of making such stakeholders as stockholder of the Company by granting them what is generally known as ESOP( Employee Stock Options Plan)....

Read More

Allowability of ESOP expenditure

Income Tax - In today’s world employers have become increasingly motivated to make the employees a part of their wealth creation process.  A scheme of Employee Stock Option (‘ESOP’) is one such process where employers reward employees by making them partners/ rightful owners in wealth which they have build together by issuing shares in the enti...

Read More

ESOP – A Motivational tool for Startups

Income Tax - Traditionally, ESOPs were given to remunerate senior employees and to acknowledge their proven contribution to the company. However, in modern times, ESOPs are used as a consideration as Startups can’t afford to spend high salaries in the beginning. Employee Stock Options in India has gained immense popularity in the recent times with t...

Read More

An overview of taxation on India ESOPs for US based NRIs

Income Tax - Employee Stock Option Plans (ESOPs) give employees a right to buy company shares at a pre- decided price and it forms part of taxable income. Most senior employees working with blue chip companies get ESOPs regularly and they have to pay tax on their ESOPs. ...

Read More

Process of ESOP Allotment in Listed companies

Income Tax - Section 62 (1) (b) of Companies Act, 2013 states that where at any time, a company having a share capital proposes to increase its subscribed capital by the issue of further shares, such shares shall be offered to employees under a scheme of employees stock option, subject to special resolution passed by company and subject to such condit...

Read More

Tax on ESOPs should be only at the point of sale of shares by employees

Income Tax - The section states that ESOPs issued free of cost or at concessional rates will be taxed on the date of exercise on the difference between the fair market value and the amount  actually paid by the employee. ...

Read More

Expenses / Discount on ESOP exercised by the employees are allowable

Pr. CIT Vs New Delhi Television Ltd. (Delhi High Court) - Pr. CIT Vs New Delhi Television Ltd. (Delhi High Court) Legislature itself contemplates the discount on premium under ESOP as a benefit provided by the employer to its employees during the course of sendee. If the Legis­lature considers such discounted premium to the employees as a fringe benefit o...

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Discount on ESOP being in the nature of employee cost, allowed u/s 37 subject to adjustment for lapsed /unvested options

ACIT Vs People Interactive India Private Ltd. (ITAT Mumbai) - ITAT Mumbai held In the case of ACIT vs. People Interactive India Private Ltd. that the issue in hand is squarely covered by the decision of Hon’ble Special Bench-Bangalore Tribunal in (2013) 35 taxmann.com 335(SB) Biocon Limited v. DCIT (LTU) in favour of the assessee company whereby the Hon’bl...

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Expenses debited as cost of ESOP in profit and loss account allowable

CIT Vs Lemon Tree Hotels Ltd (Delhi High Court) - In case of CIT vs. Lemon Tree Hotels Ltd Following the Madras High Court in CIT-III Chennai v. PVP Ventures Ltd. (TC(A) No. 1023 of 2005) it was held by Delhi High Court that ESOP could be debited to the profit and loss account of the Assessee....

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Discount on shares under ESOPs is allowable expenditure

M/s GlaxoSmithKline Consumer Healthcare Ltd. Vs The JCIT (ITAT Chandigarh) - ITAT Chandigarh held In the case of M/s GlaxoSmithKline Consumer Healthcare Ltd vs. The JCIT that it is a settled law that an unascertained liability has to be allowed even if the same is quantified on a future date....

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ESOP – Difference Between Market & Offer Price is Deductible Expenditure

CIT Vs PVP Ventures Limited (Madras High Court) - On the issue of expenditure of 66.82 lakhs towards the issue of shares to the Employees Stock Option is concerned, the Tribunal pointed out that the shares were issued to the employees only for the interest of the business of the assessee to induce employees to work in the best interest of the asses...

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Recent Posts in "ESOP"

Everything about Employee Stock Options Plans (ESOPs)

Almost all of you must have heard the stories of many drivers, office assistants and secretaries of Infosys becoming millionaire. This all could become possible due to a system of making such stakeholders as stockholder of the Company by granting them what is generally known as ESOP( Employee Stock Options Plan)....

Read More
Posted Under: Income Tax | ,

Allowability of ESOP expenditure

In today’s world employers have become increasingly motivated to make the employees a part of their wealth creation process.  A scheme of Employee Stock Option (‘ESOP’) is one such process where employers reward employees by making them partners/ rightful owners in wealth which they have build together by issuing shares in the enti...

Read More
Posted Under: Income Tax |

Expenses / Discount on ESOP exercised by the employees are allowable

Pr. CIT Vs New Delhi Television Ltd. (Delhi High Court)

Pr. CIT Vs New Delhi Television Ltd. (Delhi High Court) Legislature itself contemplates the discount on premium under ESOP as a benefit provided by the employer to its employees during the course of sendee. If the Legis­lature considers such discounted premium to the employees as a fringe benefit or ‘any consideration for employment’...

Read More

ESOP – A Motivational tool for Startups

Traditionally, ESOPs were given to remunerate senior employees and to acknowledge their proven contribution to the company. However, in modern times, ESOPs are used as a consideration as Startups can’t afford to spend high salaries in the beginning. Employee Stock Options in India has gained immense popularity in the recent times with t...

Read More
Posted Under: Income Tax |

Tax on ESOPs should be only at the point of sale of shares by employees

The section states that ESOPs issued free of cost or at concessional rates will be taxed on the date of exercise on the difference between the fair market value and the amount  actually paid by the employee. ...

Read More
Posted Under: Income Tax |

An overview of taxation on India ESOPs for US based NRIs

Employee Stock Option Plans (ESOPs) give employees a right to buy company shares at a pre- decided price and it forms part of taxable income. Most senior employees working with blue chip companies get ESOPs regularly and they have to pay tax on their ESOPs. ...

Read More
Posted Under: Income Tax |

Process of ESOP Allotment in Listed companies

Section 62 (1) (b) of Companies Act, 2013 states that where at any time, a company having a share capital proposes to increase its subscribed capital by the issue of further shares, such shares shall be offered to employees under a scheme of employees stock option, subject to special resolution passed by company and subject to such condit...

Read More
Posted Under: Income Tax |

ESOP vs Sweat Equity -Employee Retention Mechanism Instrument

This article throws light on the situation pertaining to the aspect of employee retention for basic start up business and businesses which are already established. Promoters today have huge cost of retention and gone are those days when people stay for 30-40 years in a company i.e from their young 20’s to their super annuation 60...

Read More
Posted Under: Income Tax |

Discount on ESOP being in the nature of employee cost, allowed u/s 37 subject to adjustment for lapsed /unvested options

ACIT Vs People Interactive India Private Ltd. (ITAT Mumbai)

ITAT Mumbai held In the case of ACIT vs. People Interactive India Private Ltd. that the issue in hand is squarely covered by the decision of Hon’ble Special Bench-Bangalore Tribunal in (2013) 35 taxmann.com 335(SB) Biocon Limited v. DCIT (LTU) in favour of the assessee company whereby the Hon’ble Special Bench has held that the discou...

Read More

Expenses debited as cost of ESOP in profit and loss account allowable

CIT Vs Lemon Tree Hotels Ltd (Delhi High Court)

In case of CIT vs. Lemon Tree Hotels Ltd Following the Madras High Court in CIT-III Chennai v. PVP Ventures Ltd. (TC(A) No. 1023 of 2005) it was held by Delhi High Court that ESOP could be debited to the profit and loss account of the Assessee....

Read More
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