Company is deducting TDS @ 30% slab rate on ESOP. However, I fall under 20% slab rate. Can I claim return while filling my ITR-1 Return for this extra TDS deducted?
Hey @riya_gupta
Yes, you can claim all the TDS Deducted by your employer while filing ITR. If the deducted TDS is more than your total tax liability then refund of the same will be issued once filed ITR is processed by the IT Department.
Read more about ESOP Taxability here
4 posts were merged into an existing topic: What are ESOPs & its taxation
TDS was deducted but was not deposited in the same year but next year. TDS claim was not entertained as amount deposited was less. In next year the TDS was deposited but we claimed whatever was due. Now the TDS spread in two years is lying with IT Dept. The deductee organization is not rectifying the previous year return and IT Dept too is not acting on the complaint claiming Computer has not deducted the anamoly. What should I do?
First, ensure that you have all the necessary documents and proof regarding the TDS deductions and deposits. Keep a record of the TDS certificates and any communication you’ve had with the deductee organization and the IT Department.
Since the deductee organization is not rectifying the previous year’s return. You can consider reaching out to the Income Tax Department directly and raising a grievance request about the same. Provide them with all the evidence and details you have, clearly explaining the discrepancy and the failure of the deductee organization to rectify the return.
How does the section 54 exemption come to picture on sale of foreign equiry? Can some explain?
You can read about Section 54F of Income Tax on sale of LTCA except house- Learn by Quicko which states that a taxpayer can claim an exemption on the sale of long-term capital asset except for house property if the taxpayer invests the sale consideration in the purchase or construction of a residential house property.
Thanks for this, does section 54f exemption also applied to purchase of NA Land for construction of house, which will be done with Home Loan and then paid off using the sale of equity proceeds?
54F exemption is available if you invest the sales proceeds from the LTCA in the purchase or construction of a house property.
For more clarity about the taxation aspect, please refer to this article or you can Ask an Expert
Hey folks,
Thank you for sharing such valuable insights around ESOP taxation.
I have some vested grants which I have not exercised yet.
I would like to understand if I need to declare these options in my ITR?
Thanks
The employee has a right to exercise the ESOP on the exercise date. However, if the employee does not exercise the same, there is no tax implication for the employee.
Thanks for the quick response @Shrutika_Shah
What I’m trying to specifically understand here is that, do I need to declare my grants and vested options as foreign assets that I’m holding while I’m filing my ITR?
Reference: https://twitter.com/actusdei/status/1671290583925788672
Yes, you will have to declare the ESOPs granted until they are vested in schedule FA while filing your ITR.
1 Like
Hi, I filed ITR 2 for FY 21-22 and deferred the TDS paid on ESOPs. I received the TDS as refund. Now my CA is saying that the filing was wrong. I cannot claim refund as my company is not an eligible start up. And I will have to pay back the refund + interest + 25% penalty. Can you please help me and confirm if this is the correct course of action? Can anyone claim refund of TDS in case of ESOPs?
In case of a refund of TDS of ESOPs, we need more information. On the basis of the available info, we cannot tell anything. You can Ask an Expert for the same.
Hi @Ridhima_Sharma @Shrutika_Shah
I had a basic question related to taxation on ESOPs.
When I am exercising ESOPs, the shares are getting deposited to my demat account. But, I am not getting any monetary benefit out of it until I sell those shares at profit, if any.
When I sell the shares at profit, I will be paying the LTCG or STCG (whichever applicable).
I don’t understand why do we need to pay any tax at the time of exercising the ESOP (on the amount [FMV - exercise price]). Why do we need to pay tax, when there is no income?
Could you please help me understand this.
ESOP allows an employee to buy a company’s stock below-market price. It also offers ownership interest to employees.
The exercise price is usually lower than the stock’s prevailing FMV. So, when the employee exercises the option, i.e., agrees to buy; the difference between the FMV (on exercise date) and exercise price is taxed as a prerequisite under Salary.
Budget 2020 amendment – From the FY 2020-21, an employee receiving ESOPs from an eligible start-up need not pay tax in the year of exercising the option.
Hi Folks,
For LTCG holding period calculation of ESOP, lets say i exercised my ESOP on Sep 1 2021
Company approved it a week later on Sep 8 2021, but it got credited on demat account only on Oct 15th.
from which date holding period will be calculated for LTCG(Sep 1 - exercise date or Sep 8 when it approved or Oct 15 when it got credit in demat?)
Hey @Kiruba_v,
The period of holding is calculated from the exercise date up to the date of sale. Here’s a detailed read on ESOPs Taxation for you!
Hope this clarifies!