Tax treatment to shares received under esops by nri
Ashokkumar
(Querist) 26 February 2013
This query is : Resolved
A NRI Employee working in US in a subsidiary of Indian co.is granted Shares under the Indian Co.'s ESOPS Scheme..He is NOT on Payroll of the Indian Co.He does NOT have any property or Investment in India.His Status is NRI. He exercises his option by making payment from his NRE Account in India.What will be Tax treatment to him, when he sales these shares?
1.Will he liable to short Term/Long Term Capital Gain Tax? if so, at what rate and under which clause of ITAX Tules?
How the capital Tax would be calculated?
1.Difference Between Sales Price and Purchase price or Market Price prevailing on the date of EXERCISING the option and Purchase price.
2. Will this be considered "Income From Other Sources?"
3. If he includes this income of india in his income in USA, declares in his Returns there and Pays Tax there, is it necessary to pay Tax here in India or get Refund?
Will this be covered under DTTE (Double Taxation Treaty Agreement?
Shall appreciate your valuable advice/guidance.
VARUN MAHAJAN
(Expert) 27 February 2013
Yes the income arising in India will be taxable in India.Income will be taxable under the head Income from Capital Gain.
Tax rate will depend upon whether it is long term i.e 36 months otherwise but for shares it is reduced to 12 Months.
Ans to Q1...this will depend when it will be actually seen
If there is an agreement(DTTE) between both the countries then an Individual need not to pay tax in both countries.
Raj Kumar Makkad
(Expert) 01 March 2013
Nothing to add more in the given advice.
