9911796707
TMI BlogClarification on the taxability of ESOP/ESPP/RSU provided by a company to its employees through its overseas holding companyX X X X Extracts X X X X X X X X Extracts X X X X ..... ST Policy Wing, Central Board of Indirect Taxes and Customs, Department of Revenue, Ministry of Finance, Government of India, New Delhi has issued the above referred Circular. For the uniformity in implementation and in exercise of the powers conferred under section 168 of the Goa Goods and Services Tax Act, 2017 (Goa Act 4 of 2017) it is hereby directed that the Said Circular issued by the GST Policy Wing, Central Board of Indirect Taxes and Customs, Department of Revenue, Ministry of Finance, Government of India shall be applicable, mutatis mutandis, in implementation of the Goa Goods and Services Tax Act, 2017 (Goa Act 4 of 2017). A copy of the above referred Circular is attached herewith as Annexure. Difficulty, if any, in implementatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the cost of such securities/shares is generally reimbursed by the subsidiary company to the holding company. 2.2 Doubts are being raised regarding taxability of such a transaction under GST, i.e. whether such transfer of shares/ securities by the foreign holding company directly to the employees of the Indian subsidiary company and subsequent re-imbursement of the cost of such shares/ securities by the Indian subsidiary company to the foreign holding company can be considered as import of financial services by the Indian subsidiary company from the foreign holding company and whether the same can be considered as liable to GST in the hands of Indian subsidiary company on reverse charge basis. 3. In order to clarify the issue and to ensu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ares at the grant price or by holding the options until they vest. The foreign holding company of the domestic subsidiary company issues ESOP/ESPP/RSU, which are securities/shares listed on the foreign stock exchange, to the employees of the domestic subsidiary company. The foreign holding company transfers the shares directly to the employees of the subsidiary company. The domestic subsidiary company generally reimburses the cost of such shares to the foreign holding company on cost-to cost basis either through an actual remittance or through an equity transfer as prescribed by the relevant Indian Accounting Standard. The employees hold the shares and may sell them at a later date, if they so choose. 4.2 The foreign holding company issues ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shares of the foreign holding company to the employees of domestic subsidiary company. 4.4 The foreign holding company directly transfers the shares/securities to the employees of the domestic subsidiary company on the request of the said domestic subsidiary company. Reimbursement of such securities/ shares is generally done by domestic subsidiary company to foreign holding company on cost-to-cost basis i.e. equal to the market value of securities without any element of additional fee, markup or commission. Since the said reimbursement by the domestic subsidiary company to the foreign holding company is for transfer of securities/shares, which is neither in nature of goods nor services, the same cannot be treated as import of services by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er name called, GST would be leviable on such additional amount charged as consideration for the supply of services of facilitating/ arranging the transaction in securities/ shares by the foreign holding company to the domestic subsidiary company. The GST shall be payable by the domestic subsidiary company on reverse charge basis in such a case on the said import of services. 5. It is requested that suitable trade notices may be issued to publicize the contents of this Circular. 6. Difficulty, if any, in implementation of this Circular may please be brought to the notice of the Board. Hindi version would follow. (Sanjay Mangal) Principal Commissioner (GST) - Circular - Trade Notice - Public Notice - Instructions - Office orders Tax Manag ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
