Tax & Legal

According to a recent judgment of the Supreme Tax Court, the gratuitous transfer of shares to senior employees to secure continuity in succession is not taxable as income from employment. The court further noted that there was no automatic presumption that a share transfer to an employee was made in consideration for employee services rendered.

The Supreme Tax Court has held that the tax-free employee share benefit is restricted to those employees with an actual benefit in the given year and cannot be claimed lump-sum for all employees participating in the programme.

The Supreme Tax Court has held that the benefit from the grant of employee shares is to be based on the value of the shares on the date the transfer agreement became binding on both sides. It also held that there was no automatic presumption that a share transfer to the spouse of an employee was made in consideration for employee services rendered.

The Supreme Tax Court has held that the return of employee shares at a guaranteed price leads to employment income in the year of return in the amount by which the price exceeds the market value.