Background

Company A is headquartered in US and has a subsidiary company B in India.
Company A is primarily owned by a Private Equity firm (approx. 80% ownership)
Company A (US company) has issued ESOP to employees including employees of subsidiary company in India. Stock options were issued at a price of $10 per option.
FMV as per merchant banker report is $15 as on December 31, 2020
In June 2021, there is transfer of ownership to a new Private Equity company. Both are large PE firms and majority stake exceeding 70-75% has exchanged hands
As per transaction price for above deal is approx. $30
Company A has not obtained any valuation report as on date after that Dec 20
As part of the ownership transfer, ESOPs issued by company A were cancelled and the employees (including Indian employees) were paid the net differential value ($30 less $10 = $20)

Query

Query is specifically around tax treatment in the hands of Indian employees. Company has shown this in form16 under other income.

· Whether the options granted by company A under its ESOP plan (and later on rescinded by the employees) are treated as capital asset?
· If answer to question 1 is affirmative, then whether the waiver of right to receive shares by the employees amount to transfer chargeable to tax under the head “ capital gains”?
· If answer to question 2 is affirmative, then can the period of holding of these options for computation of capital gains be considered from the grant date of such ESOP options?