Under Sec 47 Gift of shares allotted under ESOP is not exempt as a transfer (i.e. the gift is a transfer).
Under Sec 48 For computing Cap Gains on Gift of shares alotted under ESOP, market value will be taken as consideration for such transfer.
Thus if assessee gifts the ESOP with 1 yr from allotment the assessee is liable for tax at the time of Gift for (Short Term Cap Gain = Mkt Value - Excercise Price). If gift is after 1 year since long-term no cap-gains tax.
The above is based on my limited understanding...this ammendment came in Yr 2001... surprising an article in 2005 still doesnt provide for it.
