The Government of Maharashtra on July 05, 2024, issued clarification on the taxability of ESOP/ESPP/RSU provided by a company to its employees through its overseas holding company.
The following has been stated namely: -
• It is clarified that no supply of service appears to be taking place between the foreign holding company and the domestic subsidiary company where the foreign holding company issues ESOP/ESPP/RSU to the employees of the domestic subsidiary company, and the domestic subsidiary company reimburses the cost of such securities/shares to the foreign holding company on cost-to-cost basis.
• In cases where an additional amount over and above the cost of securities/shares is charged by the foreign holding company from the domestic subsidiary company, by whatever name called, GST would be liveable 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 a reverse charge basis in such a case on the said import of services.
The detailed circular is given in the attached document.
[Trade Circular no. – 8T of 2024]
