Flipkart Esop case: Could a buyback of unexercised options mean lower tax bill?
“The ITAT’s decision is based on the literal wording of Section 17(2)(vi), which treats the Esop benefit as salary only when an employee exercises the option and receives the shares. Until then, the employee holds a contractual right to buy shares in the future. The tribunal treated this right as a capital asset under Section 2(14) and held that the employee’s relinquishment of that right amounted to a transfer under Section 2(47). Hence, the payout was taxed as capital gains, not salary,” explained Ankit Jain, partner, Ved Jain and Associates.
