tax on esop
This query is : Resolved
15 July 2010
hi friends..
can any body clarify me regarding tax on esop if a non resident sales or transfers the share he got from his employer in india. he is a foreigner.pls clarify me whether he will be taxed in india? and if yes how??
can any body clarify me regarding tax on esop if a non resident sales or transfers the share he got from his employer in india. he is a foreigner.pls clarify me whether he will be taxed in india? and if yes how??
15 July 2010
Yes he is taxable in india. just check this example:
Lets see tax aspect with an example:
Mr. X is given an option to buy 1000 shares of employee company within a period one year @ Rs.200/-. Market value of the shares is Rs.500/-.
Mr. X exercise option immediately and buy shares at Rs.200/-
So he will be taxed at 1000 X Rs.300/- (being the diff. Between market price and purchase price) = Rs.300000/- @ 33 % (taxable perquisite). For calculating taxable perquisite, market value of shares at the time of option exercised is considered.
Now if he sale the shares, within one year at Rs.1000/- so ,his profit will be taxed at normal rate i.e. short term capital gain.
Tax will be on Rs.1000 (Sale Price )minus Rs.500 (Market value at the time of option exercise date)= Rs.500 X 1000 (Shares) =Rs.500000/- . This Rs.500000/- will be taxed at normal rate of tax. OR alternatively ,he can sale after one year (Price may not be attractive at that time) and pay 10 % long term capital gain tax.
Hence taxable perquisite is Rs.300000/- and Capital gain is Rs.500000/-.
Lets see tax aspect with an example:
Mr. X is given an option to buy 1000 shares of employee company within a period one year @ Rs.200/-. Market value of the shares is Rs.500/-.
Mr. X exercise option immediately and buy shares at Rs.200/-
So he will be taxed at 1000 X Rs.300/- (being the diff. Between market price and purchase price) = Rs.300000/- @ 33 % (taxable perquisite). For calculating taxable perquisite, market value of shares at the time of option exercised is considered.
Now if he sale the shares, within one year at Rs.1000/- so ,his profit will be taxed at normal rate i.e. short term capital gain.
Tax will be on Rs.1000 (Sale Price )minus Rs.500 (Market value at the time of option exercise date)= Rs.500 X 1000 (Shares) =Rs.500000/- . This Rs.500000/- will be taxed at normal rate of tax. OR alternatively ,he can sale after one year (Price may not be attractive at that time) and pay 10 % long term capital gain tax.
Hence taxable perquisite is Rs.300000/- and Capital gain is Rs.500000/-.
Message likes :
1 times
15 July 2010
During the FBT era, no FBT was applicable on ESOP given to a non resident if he was resident outside India through out the vesting period, else it was to be taxed proportionately. However, the new perquisite rules are silent on this issue. Going by the same view, ESOP given to a non resident will be proportionately taxable for the no. of days he was resident in India.
However, where the non resident transfers the shares which he received from his employer as ESOP, the difference between the selling price & the FMV on the exercise date will be treated as capital gains taxed accordingly.
However, where the non resident transfers the shares which he received from his employer as ESOP, the difference between the selling price & the FMV on the exercise date will be treated as capital gains taxed accordingly.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Is this income indian or foreign income?
- ITC temporary reversal and reclaim
- GST on export of services and Input Credit
- RCM applicability on Rent Paid by Registered Person to Unregistered Landlord for Residental Building
- Inventory of finished goods
- Applicable TDS rate for sale of property in Nov 2024
- Confusion around Form 26QB fields
- Sale of property furniture sale
- REGARDING 25 AS DATE OF PAYMENT AND DATE OF BOOKING
- Quiery in relation to GST liability in case of an advocate who has obtained GST registration.
- BUYING PROPERTY COULD NOT FILE 26QB
- Gst input for FY 23-24
- Regarding Waiver of Interest levied u/s 50 of PGST/CGST Act
- LAST YEAR 2022-23 ITC IN NEXT YEAR 2023-24 REPORITNG IN GSTR-9
- MIS MATCH OF INVOICE NUMBER
- IGST Credit-Show cause notice issued-confusion
- Issue of gst e invoice
- How to adjusted advances given or receipt
- Foreign vendor without PAN unable to to register due to non receipt of OTP on foreign number ?
- 133(6) DIN INVALID format error - ->WHERE TO REPLY 133(6) notice?
Trending Online Classes
CAclubindia
