ESPP and taxation?

Question

I have some shares alloted to me by ESPP of a company listed in NASDAQ. Now If I sell these shares with in two months, at what rate will the gain be taxed?

WIll it be 10 % (as per taht of indian equity market)
Or According to income slab (for foreign equities)?

Answer 1

you are resident , so gain whereever occur shall be taxable in india. The foreign equity if soldd within before 1 year, will make the gain Short Term Capital Gain.

unlike the general impression, tax on Short term capital gains is 10 % only if securities transaction tax is paid on it. The shares which are traded on Indian Stock Exchnage is only subject to STT and thereby 10% of taxation. For ypur information read following excerpts
111A. (1) Where the total income of an assessee includes any income chargeable under the head Capital gains, arising from the transfer of a short-term capital asset, being an equity share in a company or a unit of an equity oriented fund and

(a) the transaction of sale of such equity share or unit is entered into on or after the date on which Chapter VII of the Finance (No. 2) Act, 2004 comes into force; and

(b) such transaction is chargeable to securities transaction tax under that Chapter,

the tax payable by the assessee on the total income shall be the aggregate of

(i) the amount of income-tax calculated on such short-term capital gains at the rate of ten per cent; and

"111A. (1) Where the total income of an assessee includes any income chargeable under the head Capital gains, arising from the transfer of a short-term capital asset, being an equity share in a company or a unit of an equity oriented fund and

(a) the transaction of sale of such equity share or unit is entered into on or after the date on which Chapter VII of the Finance (No. 2) Act, 2004 comes into force; and

(b) such transaction is chargeable to securities transaction tax under that Chapter,

the tax payable by the assessee on the total income shall be the aggregate of

(i) the amount of income-tax calculated on such short-term capital gains at the rate of ten per cent; and"

You should also know that even if the shares listed outside India is Long term , shall not be tax free only because of the same reason that STT is not paid.

So in your case , tax shall be on capital gains on normal rate applied for individuals.

Answer 2

You are an Indian resident.
So you would be required to pay Short Term Capital Gains Tax @ 10% if you are selling the shares within the time gap of 2 months.
Try to hold your shares for a longer period, if you can as the issue price of the shares to the employees are generally pretty and you would have to cough out a large amount of tax.
Try to sell it after one year as it would be tax free than.
For more personalized advise contact me at [e-mail]

Answer 3

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Answer 4

When you got shares. If shares are sold within 12 months, gain is short term. If sold after a year, it is long term.

Answer 5

you can know the taxed amount by this software