The Government of Uttar Pradesh 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: -
•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 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. However, in cases where an additional amount over and above the price of securities/shares is charged by the foreign holding company from the domestic subsidiary company, by whatever 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 domestic subsidiary company shall pay the GST on a reverse charge basis in such a case on the said import of services.
The detailed circular is given in the document below.
[Circular No.2425014]
