Saurav Sood, a chartered accountant (CA) and practice leader (International tax and transfer pricing) at SW India, a tax and auditing company, explains that when the employee exercises the ESOP option, it is taxable as a perquisite, which is included in the taxable salary to calculate the employee’s income.
“Taxes are withheld (TDS) by the employer while treating it (ESOPs) as part of salary (though under the category of perquisites),” said Sood.
