ESOP Tax

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

02 November 2009 I am an employee of Wyeth Ltd. (foreign US Company)working in mumbai Wyeth Ltd. offered me equity shares under ESOP & paid FBT accordingly. Now Weyth Ltd. is taken over Pfizer Ltd. (foreign Co. -US).All my ESOP Shares were within the lock-n period of 3 years. Hence the co. took over my shares at a price of Rs. 10 Lacs , & after deducting tax of Rs.2.5 lacs under US Laws, remitted net amt. of Rs.7.5 lacs. Am I further liable I Tax on Capital Gain under Income Tax Act 1961 in India ? If so, what would be my tax liability

CA. B.SRINIVASULU

CA. B.SRINIVASULU (Expert)
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02 November 2009 Since you have acquired shares when fbt was applicable. Therefore the cost to you is 0. Now you are selling the shares at Rs.7.5 lakhs and you are liable to pay capital gains tax. However please note that you have to calculate the period of holding if it is less than 12months then short term capital gains tax and taxed at the rate of 10% and if it is more than 12 months it becomes long term capital gain which is exempt from tax.