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Employee Stock Option Scheme (ESOS) means a scheme where a company grants its employees stock options. Employees stock option means the option given to the whole-time directors, employees or officers of the company where they have a right or benefit to subscribe or purchase shares on a future date at a predetermined price. The company can increase its share capital through ESOS.
A company can issue ESOS to its employees, directors or officers after receiving approval from its shareholders through a special resolution passed in the extraordinary general meeting. ESOS is a tool for the company through which the employees get a sense of ownership in the company. A company issues ESOS as a reward to the employees who have brought growth to the company.
ESOS is an option given to its employees, directors, or officers to purchase the company shares at the predetermined price on a future date. The taxability of ESOS can be calculated at two stages of its issue, which are –
The employee can claim the tax credit on the tax he/she has paid in the foreign country and is also paying in India through holding of foreign company stocks and generating income either in the form of a perquisite or capital gains. Rule 128 of the Income Tax Rules, 1962 provides the documents that are to be submitted for claiming the foreign tax credit. The following documents must be furnished for claiming the benefit of the foreign tax credit –
Points to Note-
Hence, if an employee has paid the tax on ESOS in a foreign country and simultaneously is also paying the same in India, then he/she should immediately file Form No.67 and claim the credit for the same in the Income Tax Returns.
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