Excerpt: In April 2007, the Indian government imposed a fringe benefit tax (FBT) on the allotment or transfer of shares by a company to its employees under an employee stock option plan. In October 2007, the Central Board of Direct Taxes (CBDT) issued rules prescribing the method of valuing stock options subject to the tax. This Client Alert is a reminder about the previously approved tax law changes and the fact that employers in India generally must accrue and remit the taxes once the options begin vesting (even though they may not be exercised until some later date).

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