An employee stock ownership plan (ESOP) is an employee benefit and retention plan that gives the eligible employees an option to acquire certain ownership rights and interest in the company/group company.
ESOPs are taxed at 2 events – (1) as a perquisite at the time of exercise of ESOP; and (2) as a capital gain at the time of sale of shares by employee. There are certain relaxations in case of startups.
