New Delhi, Oct. 23: The government today announced guidelines for calculating the fringe benefit tax on employee stock options (Esops).

In the Union budget, finance minister P. Chidambaram had said the options would attract the tax.

The guidelines will give a respite to companies who have been waiting for months to find out the norms.

A notification of the Central Board of Direct Taxes says the tax will be paid by employers on the difference between the fair market value of shares and the price at which they are given to employees.

For companies listed on stock exchanges, the fair market value will be determined by the share price on the date the employee gets the option.

The fair market value will be the average of opening and closing price of the share on the date of vesting of the option.

For unlisted companies, a merchant banker registered with the Securities and Exchange Board of India will fix the value on the date of vesting the option.

If the share is listed on more than one stock exchange, the value will be the average of the opening and closing price at the exchange that registers the highest volume of trading in the scrip.

The tax will apply on options issued after April 1, 2007, official sources said.

Commenting on the notification, PricewaterhouseCoopers executive director Govardhan Purohit said unlisted companies would have to obtain valuation certificates from the merchant bankers, which can be disputed by the revenue department.