India, Aug. 6 -- The Income Tax Appellate Tribunal (ITAT) has ruled that gains arising from the repurchase of vested, unexercised employee stock options (ESOPs) are taxable under the long-term capital gains (LTCG) bracket rather than salary perquisites.

Gains taxed under the LTCG regime generally attract a lower tax rate than income taxed as salary perquisites, potentially reducing the tax liability for employees. In India, LTCG are generally taxed at a flat rate of 12.5% without indexation for most assets.

The Bengaluru bench of the appellate tribunal held that stock options remain a right to subscribe to shares at a future date, and hence cannot be treated by itself as "specified securities" for the purposes of Section 17(2)(vi) of th...