In a recent ruling, the Income tax department has been advised to treat discounts offered to employees for ESOPs as a valid expense. This is a big relief for startups as it will help encourage the practice of issuing ESOPs to key employees and help retain the talent by sharing wealth with them over a period of time.
In this episode of eLagaan Whiteboard Friday, the eLagaan team talks about details of how the discounts are calculated and treated, what factors the Company should consider before offering ESOPs and how the change of events like employees quitting before vesting schedules etc. impacts the Company.
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