Q. The Central Board of Indirect Taxes & Customs (CBIC) has clarified that Employee Stock Option Plans (ESOPs), Employee Stock Purchase Plans (ESPPs), and Restricted Stock Units (RSUs) provided by foreign firms to their Indian employees will not attract Goods and Services Tax (GST) under certain conditions. Which one of the following best explains the condition?
Red Book
Red Book

[A] If the shares are listed on the Indian stock exchange.

[B] If the reimbursement is done on a cost-to-cost basis without any additional charges.

[C] If the employees are from the IT sector.

[D] If the shares are issued by an Indian holding company.

Answer: B
Notes:

Explanation – If the domestic subsidiary reimburses the foreign holding company for the cost of securities/shares on a cost-to-cost basis, no GST will be applicable. If the foreign holding company charges an additional amount over the cost of securities/shares, GST will be levied on this additional amount. The reimbursement of shares as part of employee compensation is not subject to GST unless additional charges are involved. This decision benefits multinational companies like Google, Microsoft, Oracle, and Walmart, whose Indian employees receive these stock options.

Source: The Hindu

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