ESOP

ESOP (Employee Stock Option Plan)

Company Law - In a layman’s language, Employee Stock Option Plan (ESOP) is an option given as a right and not an obligation to the employees of the Company to purchase the Company’s shares at a fixed price during a specified period of time. We can say that ESOP drives benefit to the both the Company and the […]...

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Employee Stock Option Plan for an Unlisted Company

Company Law - CA Gourav Goyal Brief about Employee Stock Option Plan (ESOP) Employee Stock Option Plan (ESOP) is a frequently used incentive mechanism used by organizations. There are various reasons for which the employees of a company are given such stock options. The phenomena of stock options is more prevalent in start-up companies which cannot aff...

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Taxation of Employee Stock Options of Domestic and Foreign Companies

Company Law - In this Article we will Discuss about Taxation of ESOPS for Employer and Employee and After Sale of Such Esops. Employee Share Options Plan is the option that a company provides to its employees to purchase the company’s shares on future dates at a pre-determined price. It is popular these days and many a times part of salary offer give...

Read More

What are ESOPs?

Company Law - Employee Stock Ownership Plan also commonly known as ESOP, is a skillful and well defined plan that is meant to provide advantage to both the employee as well as the employer, in which an employee mainly invests in the stock of the sponsoring company....

Read More

Everything about Employee Stock Options Plans (ESOPs)

Company Law - 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)....

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

Company Law - 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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ESOPs Holding period to be from date of grant not from date of vesting

Shri. N. R. Ravikrishnan Vs ACIT (ITAT Bangalore) - Period of holding ESOP options transferred by the assessee in course of buy-back scheme of his employer was to be counted from the date of grant of ESOP option and date of vesting was not relevant as options were transferred without any exercise....

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STCG or LTCG on transfer of ESOP options depends on holding period

N. R. Ravikrishnan Vs ACIT (ITAT Bangalore) - Gain arising on transfer of ESOP options should be taxed as long term capital gains where the holding period was more than 3 years as assessee acquired a valuable and transferable right and the right of share constituted capital assets from the date of grant....

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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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Recent Posts in "ESOP"

ESOP (Employee Stock Option Plan)

In a layman’s language, Employee Stock Option Plan (ESOP) is an option given as a right and not an obligation to the employees of the Company to purchase the Company’s shares at a fixed price during a specified period of time. We can say that ESOP drives benefit to the both the Company and the […]...

Read More
Posted Under: Income Tax |

ESOPs Holding period to be from date of grant not from date of vesting

Shri. N. R. Ravikrishnan Vs ACIT (ITAT Bangalore)

Period of holding ESOP options transferred by the assessee in course of buy-back scheme of his employer was to be counted from the date of grant of ESOP option and date of vesting was not relevant as options were transferred without any exercise....

Read More

Employee Stock Option Plan for an Unlisted Company

CA Gourav Goyal Brief about Employee Stock Option Plan (ESOP) Employee Stock Option Plan (ESOP) is a frequently used incentive mechanism used by organizations. There are various reasons for which the employees of a company are given such stock options. The phenomena of stock options is more prevalent in start-up companies which cannot aff...

Read More
Posted Under: Income Tax | ,

STCG or LTCG on transfer of ESOP options depends on holding period

N. R. Ravikrishnan Vs ACIT (ITAT Bangalore)

Gain arising on transfer of ESOP options should be taxed as long term capital gains where the holding period was more than 3 years as assessee acquired a valuable and transferable right and the right of share constituted capital assets from the date of grant....

Read More

Taxation of Employee Stock Options of Domestic and Foreign Companies

In this Article we will Discuss about Taxation of ESOPS for Employer and Employee and After Sale of Such Esops. Employee Share Options Plan is the option that a company provides to its employees to purchase the company’s shares on future dates at a pre-determined price. It is popular these days and many a times part of salary offer give...

Read More
Posted Under: Income Tax |

What are ESOPs?

Employee Stock Ownership Plan also commonly known as ESOP, is a skillful and well defined plan that is meant to provide advantage to both the employee as well as the employer, in which an employee mainly invests in the stock of the sponsoring company....

Read More
Posted Under: Income Tax |

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...

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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...

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Posted Under: Income Tax |

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