Double taxation on rsu(restricted stock units) given by us mnc

TDS 5007 views 7 replies

Lokesh

Others

37 Points Joined February 2017

Hello,

An employee (Resident Indian) working in India in a subsidiary of a US Company is given RSU or Restricted Stock Units of parent company. 25% RSU has vested as per the vesting schedule in Jul 2018 and he has been issued certain number of stocks. While distributing stocks , 34.32% of stocks are withheld (Sell to cover) to meet tax liability in US and after reducing these stocks, the balance is given to the employee.

Indian company also has calculated perquisite based on FMV on total number of stocks including withheld stocks and properly deducted TDS @ 30.9% and remitted the TDS and issued Form 16 for FY:2018-19 and it is properly reflecting in Form 16 Part A and Part B. So RSUs are taxed twice. About 65.22% value is consumed in tax.

Is double taxation done by company is correct ?
Can DTAA benefits be availed for refund. What is the procedure. Which ITR to file ?

Replies (7)

Kumar

Others

105 Points Joined August 2015

I'm not an expert, here is my view for what its worth:

There is typically is no double taxation. When your US broker with holds the those shares for sell to cover, the value obtained thus is passed on to your company in India and it is the company in India that pays that up as TDS to your credit. The corresponding gains are listed in your Form 16 under perquisites and TDS. Just because you are seeing that in your Form 16 and your brokers statements, it doesn't mean that its been deducted twice. Check with your company to confirm. Its highly unlikely that there was double deduction.

Amit Samtani

2 Points Joined November 2019

Hey same thing has happened with me I am taxed in my fidelity account and as per form 16 also..I think is not correct ..

what was the final conclusion on this thread?

Ajinkya Dubey

9 Points Joined April 2021

Hello, Mr. Lokesh,

Did you get to know if the RSUs are taxed twice really. I also feel the same and in touch with my company.

Daipayan Bhattacharjee

2 Points Joined August 2021

I am also facing the same problem. When the RSU vests I am not given full units e.g if 47 units vest, i get only 30 due to tax deduction. Again in my form 16 there is value for perquisites where this is added to my taxable income. Why this double taxation ? Please provide some guidance on how to avoid this ?

saurabh nolakha

2 Points Joined May 2021

Any updates to this thread ??

Ajinkya Dubey

9 Points Joined April 2021

Kumar here is correct that the withholding amount is transferred to the Indian entity. To simplify taxation, that entity adds that amount as perquisite to our income. The tax that is paid through 'sell to cover' is considered and that amount is only added to the Form16 issued by you Indian entity. CLARIFICATION FROM A CA.

Arun Chamaraju

2 Points Joined July 2023

Kumar and Ajinkya are both correct. It is not double taxation.

Normally. Sell-to-cover taxes are covered by Company and you would see the equivalent amount in your payslip as 'Equity tax cover ' . So basically, if you have 10 shares vested and 4 shares are covered in 'Sell to cover' , the amoutn equivalent to 4 shares should reflect in your payslip.