Home / Knowledge / News / Textiles / Do away with FBT on ESOPs: CII

Do away with FBT on ESOPs: CII

Apr '07
Reacting to the imposition of FBT on ESOPs, the confederation of Indian industry (CII) in a press release issued here has said that the incidence of FBT on ESOPs would lead to complete jeopardizing of the viability of such schemes thereby derailing the momentum desired for ramping up the employee morale and commitment.

It argues that the FBT burden will be ultimately passed on by the employer to the employee. Alternatively, the increased FBT burden on employers may compel them to consider discontinuance of ESOPs, which will lead to high attrition rates in the absence of this effective incentive for retaining talented personnel, warns the CII.

In case it is not possible to scrap the proposal to levy FBT on ESOPs, CII has suggested five-point formula to minimize its impact.

First, it said that the legislature should introduce the levy with prospective effect on grants issued on or after April 1, 2007, in line with the basic tenets of taxation of fairness, natural justice and stability of tax laws. As the levy of FBT at the point of exercise will result in unenvisaged tax liability in the hands of companies in respect of options, which have already been granted on or before March 31, 2007, the business plans of companies will be substantially vitiated due to the higher FBT incidence, argues the CII.

Second, CII has suggested that Black Scholes method should be adopted for the purposes of valuation of ESOPs in case of listed companies and book value method for determining the fair value of shares in the case of unlisted companies. The model determines the ESOP price based on parameters like exercise price, present share price, volatility, dividend yield, etc.

Stressing its points further CII press release has mentioned that this method has been recommended by the financial accounting standards board of the United States, guidance note issued by the Institute of Chartered Accountants of India and the international accounting standards.

Must ReadView All


E-commerce | On 19th Sep 2021

Switzerland commits $4.4 mn for UNCTAD’s e-com, digital economy work

Switzerland recently announced a contribution of $4.4 million to the...

Pic: Shutterstock/humphery

Textiles | On 18th Sep 2021

China wants to join CPTPP; Japan to consult members to respond to bid

Chinese commerce minister Wang Wentao recently submitted an...

Pic: Shutterstock

Textiles | On 18th Sep 2021

Eurozone GDP recovers quicker than expected after lockdowns: EU report

The eurozone economy recovered more rapidly than considered earlier...

Interviews View All

International apparel brands, Head honchos

International apparel brands
Head honchos

Launched first collection at onset of Covid

Textile Industry, Head honchos

Textile Industry
Head honchos

Instagram & fashion will go a long way together

Textile Industry, Head honchos

Textile Industry
Head honchos

Fabric selection & recommendation based on client's brief

Ghatit Laheru,

Ghatit Laheru

When the 2001 tremblor wrecked the Kachchh region of Gujarat throwing many ...

Susanna Koelblin,

Susanna Koelblin

Founded in 1920, Eastman is a global specialty materials company that...

David Guiho,

David Guiho

Headquartered in Apt, South of France, Delta Plus designs, manufactures...

Shujaul Rehman, Garware Technical Fibres

Shujaul Rehman
Garware Technical Fibres

Garware Technical Fibres Ltd (formerly Garware-Wall Ropes Ltd) is a...

Michael Jaenecke, Messe Frankfurt

Michael Jaenecke
Messe Frankfurt

From May 14 to 17, international exhibitors will present the entire...

Robert Brookins, Alexium International

Robert Brookins
Alexium International

Alexium International is a specialty chemical development company...

Gaurang Shah, Label Gaurang Shah

Gaurang Shah
Label Gaurang Shah

Hyderabad based designer <b>Gaurang Shah</b>, has been traversing the...

Vidur Adlakha & Riccardo Bennidini, La Fuori

Vidur Adlakha & Riccardo Bennidini
La Fuori

With an active presence in US, Italy and India, clothing brand La Fuori...

Anjali Bhaskar, Samatvam

Anjali Bhaskar

<b>Anjali Bhaskar</b> has an experience of 12 years in the fashion...

Press Release

Press Release

Letter to Editor

Letter to Editor

RSS Feed

RSS Feed

Submit your press release on


Letter To Editor

(Max. 8000 char.)

Search Companies


Leave your Comments

September 2021

Subscribe today and get the latest update on Textiles, Fashion, Apparel and so on.

Advanced Search