Taxability of employee share schemes: no GST on cost-to-cost reimbursements; GST on additional facilitation fees under reverse charge. The circular clarifies that securities/shares allotted by a foreign holding company to employees of an Indian subsidiary as part of ESOP/ESPP/RSU are neither goods nor services; where the domestic subsidiary reimburses the foreign holding company on a cost to cost basis, no supply arises and GST is not leviable. If the foreign holding company charges any additional fee, markup or commission beyond cost, that additional amount is taxable as an import of services and GST must be paid by the domestic subsidiary under reverse charge.
Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
Taxability of employee share schemes: no GST on cost-to-cost reimbursements; GST on additional facilitation fees under reverse charge.
The circular clarifies that securities/shares allotted by a foreign holding company to employees of an Indian subsidiary as part of ESOP/ESPP/RSU are neither goods nor services; where the domestic subsidiary reimburses the foreign holding company on a cost to cost basis, no supply arises and GST is not leviable. If the foreign holding company charges any additional fee, markup or commission beyond cost, that additional amount is taxable as an import of services and GST must be paid by the domestic subsidiary under reverse charge.
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