The Bengaluru bench of the Income Tax Appellate Tribunal (ITAT) has ruled that money received by an employee when an employer repurchases vested but unexercised employee stock options (ESOPs) cannot automatically be taxed as salary. The tribunal held that if the options were never exercised and no shares were allotted, the amount should instead be taxed as capital gains. The ruling came in the case (Pramod Kumar Jain vs DCIT, Circle-3(3)(1), Bengaluru). Jain, a former Flipkart employee, had received over Rs 2.33 crore when Flipkart Singapore repurchased a part of his vested ESOPs during FY 2020-21.