Employees exercising their ESOPs should know how a recent ITAT ruling will determine whether the benefit is taxed as perquisite or capital gains

A recent ITAT decision clarified ESOP repurchase taxation. The tax tribunal ruled that repurchased options are capital assets, not perquisites. This decision provides significant relief and clarity for employees and startups. Substance over form prevails, ensuring correct tax treatment regardless of filings. Employees should understand vesting, exercise, and repurchase rules for ESOPs.