An assessee got shares at discounted rate from its employer two years back. Now company (employer) and buy back the sahres from the employee at market rate.
Now, whether, profit earned by the employee assesse is taxable under the provisions of Income Tax? If yes, would it be taxable as Salary to capital gain.
Further, whether the employee would be eligible for exemption under section 54F or any other provisions available for investing profit arising out of long term capital gains?
Tax Implications on Selling Discounted Shares: Salary or Capital Gain? Evaluate Sections 17(2), 10(38), and 54F for Exemptions. An individual received shares at a discounted rate from their employer and is now considering selling them back at the market rate. The query is whether the profit from this transaction is taxable as salary or capital gain under the Income Tax Act. A response suggests examining section 17(2) to determine if the shares were part of an Employee Stock Option Plan, which might not be treated as a perquisite. If the shares meet section 10(38) conditions, the profit could be exempt. Otherwise, section 54F might offer an exemption for long-term capital gains. (AI Summary)
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