Given below are the details of an assessee’s capital gains who wants to understand tax applicable on sale of shares held by him in Starent Networks Inc which was received as part of ESOP. Given below are the timeline of the sequence of events.
Mar-1998 Worked in TCS, Mumbai. Filled tax returns in India annually
Apr-1998 Went to US on Work Permit. Worked for a company in New Jersey
Jun-2001 Joined Starent Networks Inc. (SNI) Got stock options.
Feb-2004 Return from USA to India permanently. Filed tax returns in USA regularly
Mar-2004 Continue with Starent Networks India Pvt. Ltd. Options from SNI continue
Jan-2006 Resign from Starent India. Exercise all the vested stock options (~25000). The fair value of stock option ~10L is shown as perquisite. ~3L is paid as taxes
Jun-2007 Starent Networks Inc goes public and is listed in NASDAQ. As part of IPO, the pre-IPO stocks are reverse-split 3-to-2
Sep-2008 He sent his pre-IPO stock certificates to Starent's stock administering agency and got his stocks converted to post-IPO stock certificates.
Dec-2009 Cisco Systems Inc (USA) acquires Starent Networks Inc (USA) in an all-cash deal
Feb-2010 He sent his stock certificates along with W-8BEN form (to determine my tax exemption status in US) to stock administering agency - Computershare.
Based on W-8BEN form, Computershare has not withheld any US tax deductions and has sent check for USD 5 Lk (~INR 2 Cr) which has been deposited for clearance. The following are the queries which need to be answered:
• What and how much tax is applicable (FY09, FY10, FY11).
I would highly appreciate your response.
CAclubindia
