TaxTMI 
TaxTMI 
Perquisites - Value of Any Specified Security / Sweat Equity Shares allotted or Transferred to An Employee or Former Employee - (New) Rule 15(6)/(7) / (Old) Rule 3(8)/(9)
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.... been granted under any plan or scheme therefor, includes the securities offered under such plan or scheme; Fair Market Value determine of any specified security or sweat equity shares [ Rule 15(6) of the Income Tax Rule, 2026 ] • The fair market value of any specified security or sweat equity share, being an equity share in a company, on the date on which the option is exercised by the employee, shall be determined as follows:- • (a) in a case where, on the date of the exercising of the option, the share in the company is listed on a recognised stock exchange, the fair market value shall be the average of the opening price and closing price of the share on that date on the said stock exchange, subject to t....
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....tock exchange (b) Share listed on multiple exchanges (Opening Price + Closing Price) / 2 Exchange with highest trading volume (c)(i) No trading on exercise date Closing price of nearest previous trading day Any recognised exchange (c)(ii) No trading & multiple exchanges available Closing price from exchange with highest volume Among exchanges with available data (d) Share not listed Value determined by merchant banker On specified date Valuation of specified security not being an equity share in the company [ Rule 15(7) of the Income Tax Act, 2026 ] For the purposes of section 17(1)(d), the fair market value of any specified security, not being an equity shar....
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....uences of Non-compliance • Interest and penalties may apply for failure to deduct or pay tax. • Prosecution provisions under section 476 may be invoked for employers. • Relief is available if the employee has paid the taxes and a CA certificate is provided. Under Income Tax Act, 1961 [ Upto 31.03.2026 ] Employee Stock Option Plans (ESOPs) [ Rule 3(8) of the Income Tax Rule, 1962 ] For the purposes of section 17(2)(vi), the value of any specified security or sweat equity shares allotted or transferred, whether directly or indirectly, by the employer or former employer, Free of cost or at concessional rate to the assessee. Meaning of relevant terms 1.The security or shares ....
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....eferred to in clause (9) of section 2 of the Insurance Act, 1938; • (ida) units or any other instrument issued by any pooled investment vehicle; • (ie) any certificate or instrument (by whatever name called), issued to an investor by any issuer being a special purpose distinct entity which possesses any debt or receivable, including mortgage debt, assigned to such entity, and acknowledging beneficial interest of such investor in such debt or receivable, including mortgage debt, as the case may be; • (ii) Government securities; • (iia) such other instruments as may be declared by the Central Government to be securities; and • "Onshore Rupee Bonds" issued by multilateral in....
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....pect of such shares or securities shall be deducted. VALUATION OF SPECIFIED SECURITY OR SWEAT EQUITY SHARES - AS PER RULE 3(8) Situations When the share is listed on one stock exchange When the share is listing more than stock exchange Quoted Shares • In a case where, on the date of exercise of the option, the share in the company is listed on a recognized stock exchange in India, • the fair market value shall be the • average of the opening price and closing price of the share on that date on the said stock exchange Where, however, on the date of exercise of the option, the share is listed on more than one recognized stock exchanges, the fair market value shall be th....
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...., the share in the company is not listed on a recognized stock exchange in India, the fair market value shall be such value of the share in the company as determined by a merchant banker on the specified date. "Specified date" means the date of exercise of the option; or any date earlier than the date of exercise of the option, not being a date which is more than 180 days earlier than the date of exercise of the option. Valuation of specified security not being an equity share in the company [Rule 3(9) of the Income Tax Rule, 1962] The fair market value of any specified security, not being an equity share in a company, on the date on which the option is exercised by the employee, shall be such value as determined by a merchant bank....