Taxability of the perquisite on shares issued to employees at less than market price

Perquisite on employee shares taxed when shares issued below market value; valuation depends on public offer parity and market price.

The Board treats shares issued to employees below market price as a perquisite. No perquisite arises for Government transfers or where employees are charged the same price as other shareholders/public. If employees receive shares at a lower price than other shareholders/public, the price difference is taxable as a perquisite. If offers are made only to employees, the perquisite value is the market price on the date of acceptance less the price paid by the employee.