You are here: Home » Economy & Policy » News
Business Standard

Finance ministry may look into tax regime of employee stock ownership plan

The heart of the matter here is that whether stock options should be taxed only when the employee sells them and not again at time of vesting

BS Web Team 

money, esop, shares buyback

The government will review the regime of employess stock ownership plans (Esops). Esop is a compensation tool for employees and a review is underway to address the effectiveness of the instrument, reported Economic Times. The review will not be confined to startups.

The stock option is an instrument used for compensation or to retain talent in the company. The DPIIT had pushed for making in startups taxable only at the time of sale.

The heart of the matter here is whether stock options should be taxed only when the employee sells them and not again at time of vesting. If an employee sells the stock option, as per capital gains will be levied. If the stock option is sold during the vesting period, the perquisite value gets added to the income and tax is levied according to the prevelant slab.

The Department for Promotion of Industry and Internal Trade had sent a proposal to the finance ministry to be examined. The finance ministry was of the view that the entire framework needs to be reviewed.

First Published: Thu, July 11 2019. 12:47 IST
RECOMMENDED FOR YOU