ESOP scheme-period of holding in case of employee

[Sanjeev Jain]

The Company floated the ESOP scheme on 31/03/2010. As per the ESOP scheme floated by the Company the shares are to be given to certain eligible employees. Employees can exercise shares at the prevailing market price. Shares were allotted to the employee on 31/03/2019. However, the Company credited the shares to the employee's account at the initial date when the scheme was launched based on the assumption that the employee will exercise his right. The employee sold shares on 01/01/2020. Will it be considered long term capital gains or short term capital gains?

AI Summary

Employee Sells ESOP Shares: Are Gains Long-Term or Short-Term? Shares Allotted in 2019, Sold in 2020. An employee participated in an ESOP scheme launched by a company on March 31, 2010, with shares allotted on March 31, 2019. The company credited shares to the employee's account from the scheme's launch date, assuming the employee would exercise their right. The employee sold the shares on January 1, 2020, and inquired whether the gains would be classified as long-term or short-term capital gains. A respondent opined that the gains should be considered long-term, as the entries in the company's records date back to 2010.