sweat equity

Treatment of SWEAT Equity Shares under Income Tax Act, 1961

Income Tax - Sweat Equity Shares are Shares or Specified Securities issued at discount or for consideration other than cash to employees or directors of the company as reward their hard work or for their value addition in the progress of the company . These are generally issue in lieu of value additions and against providing Intellectual Property R...

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IPL – Sweat Equity Share Issue – recognition of intellect as means to capital contribution in Corporates – IP audit in offing!

Income Tax - Indian Premier League (IPL) and cricket have generated public interest on the subject, `sweat equity ‘shares issue. Survey reveals, very few people have clear idea on the procedure of issue of sweat equity shares. What caused hue and cry is the subject of surrender of sweat equity shares issued to Sunanda Pushkar( `PUSHKAR’) in Rende...

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Tax Benefit-Equity Linked Saving Scheme (ELSS), why to invest?

Income Tax - An ELSS (Equity Linked Savings Scheme) is a mutual fund that has to invest a minimum of 80% in equity shares. The balance 20% can be in debt, money market instruments, cash or even more equity. There is a three year lock-in period for the ELSS mutual funds. Post the 36 months, the funds remain invested and work like any other open-ended m...

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Valuation of perquisites in respect of employee stock option (ESOP) for the financial year 2009-2010

Income Tax - The valuation of shares and specified securities in relation to employee stock option have been brought under Rule 3 itself, and Rules 40C and 40D of the Income-tax Rules will no longer be apply. Consistent with the change in law as regards the point of time (exercise) when such liability has to be determined, the rule now prescribes that...

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FBT abolished and Perquisites earlier covered under FBT become taxable in the hand of Employees

Income Tax - Currently, certain prescribed fringe benefits provided by an employer to his employees are liable to FBT in the hands of the employer. Such fringe benefits are not included within the scope of ‘perquisites’ as defined in section 17. As FBT will now be abolished, ‘perquisites’ will include the following: 1. Presently, FBT is levied...

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The costly ambiguity surrounding FBT on ESOPs

Income Tax - How is the FBT to be valued? And when is the tax payable? The fringe benefit is to be valued at the fair market value (FMV) of the security or sweat equity share on the date of vesting of the option minus any amount paid by / recovered from the employee for such security or shares. The FMV is to be determined a s per the method to be pre...

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Notification on Valuation of ESOP for FBT

264/2007 - (23/10/2007) - NOTIFICATION NO. 264/2007, DATED 23-10-2007 Valuation of specified security or sweat equity share being a share in the company. 40C. (1) For the purposes of clause (ba) of sub-section (1) of section 115WC, the fair market value of any specified security or sweat equity share, being an equity share i...

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Extension of Due Date of Payment of The First and Second Installment of Advance FBT on ESOPS

EXTENSION OF DUE DATE OF PAYMENT OF THE FIRST AND SECOND INSTALLMENT OF ADVANCE FBT ON ESOPS - (12/09/2007) - By virtue of the provision of clause (d) of sub-section (1) section 115 WB, introduced by Finance Act, 2007, an employer is liable to pay Fringe Benefit Tax on any consideration for employment provided by way of any specified security or sweat equity shares allotted or transferred, directly or indir...

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Recent Posts in "sweat equity"

Treatment of SWEAT Equity Shares under Income Tax Act, 1961

Sweat Equity Shares are Shares or Specified Securities issued at discount or for consideration other than cash to employees or directors of the company as reward their hard work or for their value addition in the progress of the company . These are generally issue in lieu of value additions and against providing Intellectual Property R...

Read More
Posted Under: Income Tax |

IPL – Sweat Equity Share Issue – recognition of intellect as means to capital contribution in Corporates – IP audit in offing!

Indian Premier League (IPL) and cricket have generated public interest on the subject, `sweat equity ‘shares issue. Survey reveals, very few people have clear idea on the procedure of issue of sweat equity shares. What caused hue and cry is the subject of surrender of sweat equity shares issued to Sunanda Pushkar( `PUSHKAR’) in Rende...

Read More
Posted Under: Income Tax |

Tax Benefit-Equity Linked Saving Scheme (ELSS), why to invest?

An ELSS (Equity Linked Savings Scheme) is a mutual fund that has to invest a minimum of 80% in equity shares. The balance 20% can be in debt, money market instruments, cash or even more equity. There is a three year lock-in period for the ELSS mutual funds. Post the 36 months, the funds remain invested and work like any other open-ended m...

Read More
Posted Under: Income Tax |

Valuation of perquisites in respect of employee stock option (ESOP) for the financial year 2009-2010

The valuation of shares and specified securities in relation to employee stock option have been brought under Rule 3 itself, and Rules 40C and 40D of the Income-tax Rules will no longer be apply. Consistent with the change in law as regards the point of time (exercise) when such liability has to be determined, the rule now prescribes that...

Read More
Posted Under: Income Tax |

FBT abolished and Perquisites earlier covered under FBT become taxable in the hand of Employees

Currently, certain prescribed fringe benefits provided by an employer to his employees are liable to FBT in the hands of the employer. Such fringe benefits are not included within the scope of ‘perquisites’ as defined in section 17. As FBT will now be abolished, ‘perquisites’ will include the following: 1. Presently, FBT is levied...

Read More
Posted Under: Income Tax |

Fringe Benefit Tax on ESOP'S

INTRODUCTION The proviso to section 17(2)(iii) has been omitted. So far the value of any benefit provided by the company free of cost or at a concessional rate to its employees by way of allotment of shares, debentures or warrants, directly or indirectly under any Employees Stock Option Plan or Scheme of the Company offered to […]...

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Posted Under: Income Tax |

Is FBT payable on ESOPs involving foreign shares?

THE Notification No. 264/2007 dated October 23, 2007 issued by the CBDT, specifying the Income-tax (12 th Amendment) Rules, 2007 seems to have brought in a lot of welcome clarity in terms of the methodology to be adopted for the determination of the Fair Market Value of ESOPs issued by Indian Companies, listed or unlisted. However, the qu...

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Posted Under: Income Tax |

FBT on ESOP should not apply to foreign securities?

Does the FBT law intend to cover securities under SCRA? I don’t think so. We have to look at the rationale of levy of FBT. In a booming economy, accompanied with a vibrant stock market, corporates have figured out a creative way to compensate their employees through the ESOP scheme. It could be ESOP of a listed company or an unlisted co...

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Posted Under: Income Tax |

Notification on Valuation of ESOP for FBT

264/2007 (23/10/2007)

NOTIFICATION NO. 264/2007, DATED 23-10-2007 Valuation of specified security or sweat equity share being a share in the company. 40C. (1) For the purposes of clause (ba) of sub-section (1) of section 115WC, the fair market value of any specified security or sweat equity share, being an equity share in a company, on the date on which the op...

Read More

The costly ambiguity surrounding FBT on ESOPs

How is the FBT to be valued? And when is the tax payable? The fringe benefit is to be valued at the fair market value (FMV) of the security or sweat equity share on the date of vesting of the option minus any amount paid by / recovered from the employee for such security or shares. The FMV is to be determined a s per the method to be pre...

Read More
Posted Under: Income Tax |
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