Finance Minister P Chidambaram on Thursday said the government is yet to work out the method and the rate for Fringe Benefit Tax on shares given by companies to their employees."You have to wait to see how we determine the value of ESOPs (Employees Stock Option Plans), how we tax it, all that have to be announced once we come up with detail," Chidambaram told news channels.
FBT on ESOPs is negative
"ESOPs will be taxed. Full stop," he said. Chidambaram said ESOPs would be taxed at the FBT rate, but the government was yet to decide the base, how the base would be calculated and how the tax would be applied.
"We are not completely oblivious to the fact that it would burden both employers and employees... All I can say at this moment is please wait for the scheme," he said.
The minister had on Wednesday in the Union Budget proposed to bring ESOPs under the ambit of FBT. India would be one of the few countries apart from Australia where ESOPs are taxed.
Corporates, especially software companies, have flayed the move, saying it would tax yet another item that encourage employees to put in extra effort for the company's growth and helps retain the staff at a time when attrition rate is high.
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