For stock options that have already been granted to persons in India it seems likely for the employer to encourage these individuals affected by a new proposed 35% fringe benefit tax likely to commence April 1, 2007 in India, to exercise these options, especially with respect to vested shares, prior to April 1, 2007, in order to avoid this tax treatment.
Under the proposed law, the terms of a stock option agreement could include a provision requiring that on exercise the employee reimburse the employer for the amount of this tax paid by the employer. This practice has already developed with respect to stock options granted to employees in the
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