- Foreign companies giving Esops to Indian subsidiary employees at market value won’t attract GST, as per CBIC.
- However, if a foreign company charges an additional amount for Esop/ESPP/RSU, it will come under GST.
- This clarification is part of the 16 circulars issued by CBIC after the GST Council meeting on June 22. Indian companies sometimes offer their employees the option to receive securities/shares of their foreign holding company as part of their compensation package.
- When employees exercise this option, the securities are allotted directly by the holding company to the employee, and the subsidiary company reimburses the cost of the securities to the holding company on a cost-to-cost basis.
Source A2ztaxcorp
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