Background<\/p>\n
Company A is headquartered in US and has a subsidiary company B in India.
\nCompany A is primarily owned by a Private Equity firm (approx. 80% ownership)
\nCompany 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.
\nFMV as per merchant banker report is $15 as on December 31, 2020
\nIn 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
\nAs per transaction price for above deal is approx. $30
\nCompany A has not obtained any valuation report as on date after that Dec 20
\nAs 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)<\/p>\n
Query<\/p>\n
Query is specifically around tax treatment in the hands of Indian employees. Company has shown this in form16 under other income.<\/p>\n
\u00b7 Whether the options granted by company A under its ESOP plan (and later on rescinded by the employees) are treated as capital asset?
\n\u00b7 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 \u201c capital gains\u201d?
\n\u00b7 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?<\/p>\n","protected":false},"comment_status":"open","ping_status":"closed","template":"","qa_expert":[33],"qa_category":[23],"qa_tag":[634],"class_list":["post-29058","qa","type-qa","status-publish","hentry","qa_expert-advocate-shashi-ashok-bekal","qa_category-income-tax","qa_tag-esop"],"acf":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/qa\/29058","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/qa"}],"about":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/types\/qa"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/comments?post=29058"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/media?parent=29058"}],"wp:term":[{"taxonomy":"qa_expert","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/qa_expert?post=29058"},{"taxonomy":"qa_category","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/qa_category?post=29058"},{"taxonomy":"qa_tag","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/qa_tag?post=29058"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}