When employees exercise ESOPs, the difference between fair market value and exercise price is typically taxed as perquisite under salary in the year of exercise.
Employer & employee checklist
- FMV determination on exercise date
- TDS under Section 192 on taxable perquisite
- Disclosure in Form 12BA and employee Form 16
- Capital gains on later sale of allotted shares
Companies coordinate director remuneration & TDS, Form 16, and ITR-6 filing.
