The value of ESOPs for the purposes of levy of FBT is to be computed on the basis of FMV (fair market value) of ESOPS as on the date of vesting of the options, as prescribed by the Central Board of Direct Taxes (CBDT), and as reduced by the amount actually paid by or recovered from the employee.
Here is a summary of valuation mechanism under different scenarios:
Where the shares are listed on a recognised stock exchange in India, the valuation formula is the average of opening and closing price of the share.
In case the shares are listed on multiple recognised stock exchanges in India, the value is average of opening and closing price of the share on the recognised stock exchange which records the highest volume of trading.
And where the shares are not listed on a recognised stock exchange in India, computation should be on the basis of valuation as determined by the merchant banker on the specified date.