Under section 10 (38) of Income Tax Act, the Capital Gain on sale of shares held for more then 12 months is exempt if the shares under consideration are listed on a stock exchange in India.
What is the position if ESOP are allotted and sold outside India, ( employee is Indian resident ,working and based in India) on foreign stock exchange and the sale price also recieved in another country. Is there tax exemtion on capital gains for this type of gain in any other section of the income tax act.
Tax Exemption Denied for ESOP Share Sale Outside India Under Section 10(38) Due to No STT Payment An inquiry was made regarding the tax exemption status under Section 10(38) of the Income Tax Act for capital gains on the sale of Employee Stock Ownership Plan (ESOP) shares allotted and sold outside India by an Indian resident. The response clarified that Section 10(38) does not apply since no Securities Transaction Tax (STT) is paid. If the shares are not listed on an Indian stock exchange, they are considered long-term capital gains (LTCG) if held for over 36 months, otherwise short-term capital gains (STCG). If listed, Section 112(1)(d) applies with a 10% tax rate, and the Double Taxation Avoidance Agreement (DTAA) should be considered. (AI Summary)
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