Hi,

I'd like some clarifications on how the newly introduced Fringe Benefit Tax affects ESOPs for organisations. To give you an example, say if an employee was given stock options in writing in 2004, and half of it is to be vested in this october and another half in october '09. Lets assume the employee has a total of 50,000/- shares. How is the ESOPs treated in terms of fringe benefits. Lets say the employee has to pay Rs. 10/- for each share alotted and the market value is Rs. 100/- for those shares. The employee doesn't necessarily want to sell the shares in the short term. How will the employee be taxed and at what rate ? When does the tax have to be paid ?

I would appreciate any clarity i can get on this.

Regards,

Roshni