Untangling the New ESOPs Taxation

Introduction


Deferment of TDS and payment of tax on perquisite arising from ESOPs


Our Analysis



• Q 1. Would every start-up and employees be benefited from this amendment?


• Q 2. Whether perquisite arising from ESOPs would be included in the income

of the employee in the year in which shares are allotted or transferred by

the employer?


• Q 3. At what rate, the tax shall be computed on perquisite arising from ESOPs?


• Q 4. Whether perquisites from ESOPs shall be required to be disclosed by

the employee in the return of income of the year in which shares

are allotted?


• Q 5. How would an employee be able to defer the payment of tax on

perquisite from ESOPs considering the fact that such income may be

required to be disclosed in the return of income of the year in which

shares are allotted?


• Q 6. Whether an employee shall be required to pay directly if no tax is

deducted by the employer in respect of the perquisite value of ESOPs?


• Q 7. What shall be the consequences if an employer does not deduct tax

or employee does not pay tax on perquisite value of ESOPs?