Sweat Equity Shares – Section 2(101)(c)(D)(D) | Income-tax Act, 2025 vs 1961

§ 2(101)(c)(D)(D) · Income-tax Act, 2025

Sweat equity shares

ITA 2025 · 2(101)(c)(D)(D) ≈ Expln. to S.115WB · 1961 Act
Definition — Section 2(101)(c)(D)(D)

Has the meaning assigned in Section 2(88) of the Companies Act, 2013 — means equity shares issued at a discount or for consideration other than cash, to directors or employees for providing know-how or making available rights or intellectual property.

Act Comparison
Income-tax Act, 2025
2(101)(c)(D)(D)
Sweat equity shares
Income-tax Act, 1961
Expln. to S.115WB
Sweat equity shares
Key Points
  • Moved from Explanation to Section 115WB of 1961 Act into Section 2 as a standalone sub-definition for holding period provisions
  • Perquisite value at issuance is taxed as salary income
  • Subsequent capital gains computed from the fair market value at issuance
💡 Practical Note

Sweat equity shares are popular in startups — the fair market value at grant date becomes the cost of acquisition for future capital gains computation.

Published by Simplified Tax India — Clear, section-wise comparison of Income-tax Acts. ← Back to Section 2 Definitions Table
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