Perquisite - Employee Stock Option Plan (ESOP) of start-ups

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....d in section 2(h) of the Securities Contracts (Regulation) Act, 1956 and, where employees' stock option has been granted under any plan or scheme therefor, includes the securities offered under such plan or scheme; Concept • ESOPs are taxed as salary (perquisite) at the time of exercise. • Employer must deduct TDS immediately. • BUT this section creates a relief mechanism for startups. Time of Tax Deduction [ Section 392(3) & Section 289(3) ] • Any person, being an eligible start-up referred to in section 140, responsible for paying any income of the nature specified in section 17(1)(d) in any tax year, shall deduct or pay, as the case may....

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....he 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 the provisions of clause (b); • (b) in a case where, on the date of exercising of the option, the share is listed on more than one recognised stock exchanges, the fair market value shall be the average of the opening price and closing price of the share on the recognised stock exchange which records the highest volume of trading in the share; • (c) in a case where, on the date of exercising of the option, there is no trading in the share on any recognized stock exchange, the fair market value shall be- • (....

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....uation 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 share in a company, on the date on which the option is exercised by the employee, shall be such value as may be determined by a merchant banker on the specified date. Under Income Tax Act, 1961 [ Upto 31.03.2026 ] Tax payment in respect of income pertaining to Employee Stock Option Plan (ESOP) of start-ups [Inserted by Finance Act, 2020, W.e.f. AY 2021-22] ESOPs have been a significant component of the compensation for the employees of start-ups, as it allows the founders and start-u....

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....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 the average of opening price and closing price of the share on the recognised stock exchange wh....