ESOP

Employee Share Based Payment- Accounting & Taxability

Finance - Employee Share Based Payments, it is a payment based on price or value of shares. Share plans and share option plans are a common feature of employee remuneration, for directors, senior executives and many other employees. ESOPs are very much common among the startups where the startup gives ownership interest in the company to their [&he...

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ESOP Guide For Start-Ups

Finance - INTRODUCTION ♣ ESOPs in India and globally have been used by businesses to encourage employees to buy shares and own a part of the company while aligning their performance and hard work to the same. ♣ ESOP has gained enough popularity after young start-ups struggle to attract suitable human capital. ♣ Start-ups start losing the [&he...

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ITAT order on Taxability of ESOP to Dubai Based Employee of HDFC Bank

Finance - The assessee is an individual, who is an employee of HDFC Bank Limited, Mumbai, and currently on deputation to HDFC Bank Representative Office in Dubai. The status of the assessee is of the non-resident....

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Tax deductibility of ESOP expense

Finance - Prologue The shares allotted by the employer under Employee Stock Option Plan (ESOP) are taxable in the hands of the employees as perquisite u/s 17(2)(vi) of the Income-tax Act, 1961 (‘the Act’) under the head salary. Regarding ESOP, the bone of contention between the employer Assessee and the tax department is on the tax deductibilit...

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Procedure for Issue of ESOP & benefits of its introduction in Startups

Finance - Procedure for introducing ESOP scheme and benefits of introducing ESOP scheme in Startups In recent years,startups have proven to be very successful in India. It has been observed that startups are budding at a rate of 10-12% per year. Startups to be successful must retain their hardworking employees and at the same time have to […...

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

Finance - 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. ...

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AO can look-into ESOP sale Income based on Form 16 during I-T Return Processing

Dr. S. Muthian Vs ACIT (ITAT Chennai) - Dr. S. Muthian Vs ACIT (ITAT Chennai) Sec.143(3) of the Act contemplates two methods of assessment being made vis-a -vis a return filed by an assessee. Wherever, the AO wants to scrutinise the return of income, he has to issue notice u/s.143(2) of the Act so as to complete the assessment u/s.143(3) ...

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Tax on gain on sale of ESOP in USA given to Indian employee by Google Inc USA- HC remit matter back to AO

Dr. S. Muthian Vs ACIT (Madras High Court) - (i) Whether the gain on sale of stock options in USA that were given to the Indian employee by M/s.Google Inc., USA amounts to perquisites taxable under the Income Tax Act, 1961 or not?; (ii) Whether the amounts shown in Form-16 as Tax Deducted at Source on such perquisites would be the exclusive...

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Tax Payable on ESOP to Dubai Based taxpayer for services rendered in India

Unnikrishnan V S Vs ITO (ITAT Mumbai) - In case the assessee is to get ESOP benefits in respect of his service in U.A.E. and he exercises these options at a later point of time, say after returning to India and ceasing to be a non-resident, he will still have the treaty protection of that income under article 15(1). This principle, how...

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Expense on issue of shares under ESOP allowable

Pr. CIT Vs Lemon Tree Hotels (P) Ltd. (Delhi High Court) - Pr. CIT Vs Lemon Tree Hotels (P) Ltd. (Delhi High Court) The question of law urged with respect to expenditure claimed towards case of Employee Stock Ownership Plan (ESOP) has been subject matter of previous orders of this Court in respect of the present assessee. For A.Y. 2008-09 in ITA 107/2017 (C...

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Employees Stock Option Scheme Compensation expense allowable

DCIT Vs M/s. Info Edge India Ltd. (ITAT Delhi) - DCIT Vs M/s. Info Edge India Ltd. (ITAT Delhi) From the order of ld. CIT(A), it is clear that the ld. CIT(A) has relied on various decisions and has per the decisions relied by the ld. CIT(A), the ESOP has been treated as Revenue expenditure. The Revenue did not bring any contrary decision against t...

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Company may permit empaneled stock brokers to fund ESOP

SEBI/HO/CFD/DCR1/OW/P/2020/0011948/1 - (20/07/2020) - As per Regulation 9(2) of the SEBI (Share Based Employee Benefits) Regulations, 2014 (SBEB Regulations)  the company may permit the empaneled stock brokers to fund the payment of exercise price which shall be adjusted against the sale proceeds of some or all the shares, subject to the provisions of...

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Recent Posts in "ESOP"

Employee Share Based Payment- Accounting & Taxability

Employee Share Based Payments, it is a payment based on price or value of shares. Share plans and share option plans are a common feature of employee remuneration, for directors, senior executives and many other employees. ESOPs are very much common among the startups where the startup gives ownership interest in the company to their [&he...

Read More
Posted Under: Income Tax |

ESOP Guide For Start-Ups

INTRODUCTION ♣ ESOPs in India and globally have been used by businesses to encourage employees to buy shares and own a part of the company while aligning their performance and hard work to the same. ♣ ESOP has gained enough popularity after young start-ups struggle to attract suitable human capital. ♣ Start-ups start losing the [&he...

Read More
Posted Under: Income Tax |

AO can look-into ESOP sale Income based on Form 16 during I-T Return Processing

Dr. S. Muthian Vs ACIT (ITAT Chennai)

Dr. S. Muthian Vs ACIT (ITAT Chennai) Sec.143(3) of the Act contemplates two methods of assessment being made vis-a -vis a return filed by an assessee. Wherever, the AO wants to scrutinise the return of income, he has to issue notice u/s.143(2) of the Act so as to complete the assessment u/s.143(3) of the Act. […]...

Read More

ITAT order on Taxability of ESOP to Dubai Based Employee of HDFC Bank

The assessee is an individual, who is an employee of HDFC Bank Limited, Mumbai, and currently on deputation to HDFC Bank Representative Office in Dubai. The status of the assessee is of the non-resident....

Read More
Posted Under: Income Tax |

Tax on gain on sale of ESOP in USA given to Indian employee by Google Inc USA- HC remit matter back to AO

Dr. S. Muthian Vs ACIT (Madras High Court)

(i) Whether the gain on sale of stock options in USA that were given to the Indian employee by M/s.Google Inc., USA amounts to perquisites taxable under the Income Tax Act, 1961 or not?; (ii) Whether the amounts shown in Form-16 as Tax Deducted at Source on such perquisites would be the exclusive gain made by the Assessee on such stock...

Read More

Tax Payable on ESOP to Dubai Based taxpayer for services rendered in India

Unnikrishnan V S Vs ITO (ITAT Mumbai)

In case the assessee is to get ESOP benefits in respect of his service in U.A.E. and he exercises these options at a later point of time, say after returning to India and ceasing to be a non-resident, he will still have the treaty protection of that income under article 15(1). This principle, however, is not a one-way route. Conversely...

Read More

Tax deductibility of ESOP expense

Prologue The shares allotted by the employer under Employee Stock Option Plan (ESOP) are taxable in the hands of the employees as perquisite u/s 17(2)(vi) of the Income-tax Act, 1961 (‘the Act’) under the head salary. Regarding ESOP, the bone of contention between the employer Assessee and the tax department is on the tax deductibilit...

Read More
Posted Under: Income Tax |

Procedure for Issue of ESOP & benefits of its introduction in Startups

Procedure for introducing ESOP scheme and benefits of introducing ESOP scheme in Startups In recent years,startups have proven to be very successful in India. It has been observed that startups are budding at a rate of 10-12% per year. Startups to be successful must retain their hardworking employees and at the same time have to […...

Read More
Posted Under: Income Tax |

Taxability of ESOP under Income Tax Act, 1961

1. WHAT IS ESOP? ESOP means Employees Stock Option Plan. It enables employees to buy company share at discounted price. Start-ups have great business idea but a limited financial resource to operate in the initial years. It is popular these days as starts-ups generally use ESOP to attract and retain highly talented employees for long [&he...

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Posted Under: Income Tax |

All About Employee Stock Option Plan (ESOP)

Employee Stock Option Plan (ESOP) or Equity incentive plan is the scheme through which the companies provide ownership rights to its employees. ESOP is governed through Section 62(1) (b) of the Companies Act, 2013 (CA, 2013) and SEBI (ESOS and ESPS) Guidelines, 1999 as amended....

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Posted Under: Income Tax |

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