Clarification on Taxability of Reimbursement of Securities/Shares as SOP/ESPP/RSU to Employees

Last updated: 27 June 2024

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This notification clarifies the taxability of employee share schemes like ESOP, ESPP, and RSU when provided by an Indian company through its overseas holding company. It addresses situations where employees of an Indian subsidiary are allotted shares of a foreign holding company, and the subsidiary reimburses the cost. The clarification aims to provide guidance to trade and field formations on this matter.

F. No. CBIC-20001/4/2024-GST Government of India Ministry of Finance (Department of Revenue) Central Board of Indirect Taxes and Customs GST Policy Wing ***** North Delhi, New Delhi Dated the 26th June 2024 To, The Principal Chief Commissioners/ Chief Commissioners/ Principal Commissioners/Commissioners of Central Tax (All) The Principal Directors General/ Directors General (All) Madam/Sir, Subject: Clarification on the taxability of ESOP/ESPP/RSU provided by a company to it

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FAQ :

This notification provides a clarification on the taxability of Employee Stock Option (ESOP), Employee Stock Purchase Plan (ESPP), and Restricted Stock Unit (RSU) provided by a company to its employees.

The clarification is addressed to Principal Chief Commissioners/Chief Commissioners/Principal Commissioners/Commissioners of Central Tax and Principal Directors General/Directors General.

It addresses scenarios where Indian companies offer their employees shares of a foreign holding company as part of their compensation, and the Indian subsidiary company reimburses the cost of these shares to the holding company.

The clarification was issued in response to representations received from the trade and field formations seeking guidance on the taxability of these employee share schemes.

For the full notification, please refer to the attachment provided with the original document.