Sometimes,employer provides its shares or any other security to employee free of cost.or at concessonal rate
Such shares are called ESOP (Employee Stock Option Plan)
As per Section 17 (2)
Any value
of any specified security or sweat equity shares
given by employer or former employer
free of cost or at concessional rate
is taxable perquisite
How to calculate Value of shares/securities
In case of Listed shares (Shares listed on Stock Exchange)
FMV shall be the average of Opening and Closing Value of shares as listed on stock exchange on date of exercising the option.
In case,share is listed on more than one stock exchange,then recognized stock exchange which records highest trading shall be taken
Note:-
Opening price is price of first settlement and
Closing Price is price of last settlement
In case buy and sell prices are both quoted in stock exchange,then sell price shall be taken.
In case of Unlisted shares (Shares not listed on Stock Exchange)
In this case, Value as determined by Merchant Banker shall be taken
Treatment of amount recovered from employee
If any value recovered from employee,it is reduced to arrive at taxable perquisite
