GST on Employee Stock Option Plan (ESOP) | 29 Jun 2024

Recently, Central Board of Indirect Taxes & Customs (CBIC) mandated that no Goods and Services Tax (GST) will be levied on Employee Stock Option Plan (ESOP) issued by Indian subsidiries of Multi-National Companies (MNCs).

Based on recommendations by GST Council, CBIC has mandated that, subject to some conditions, Employee Stock Option Plan (ESOP), Employee Stock Purchase Plan (ESPP), Restricted Stock Unit (RSU) issued by foreign firms will not attract GST.
- ESOP is an employee benefit plan that gives workers ownership interest in the company in the form of shares of stocks.
- ESPP is a plan where employees can purchase company stock directly at a discounted price.
- RSU is a plan where employees get incentives from equity stocks in the future (only after vesting period).
This will benefit the likes of Google, Microsoft, Oracle, and Walmart, as well as a large number of tech companies and other MNCs whose Indian
employees were getting the benefit from ESOP plans.
CBIC which is a part of the Department of Revenue under the Ministry of Finance deals with the tasks of formulation of policy concerning levy and collection of customs, central excise duties, Central GST (CGST) and Integrated GST (IGST).