<p><span>The Ministry of Finance's Circular No. 213/07/2024-GST, issued on June 26, 2024, provides clarification on the taxability of Employee Stock Option Plans (ESOP), Employee Stock Purchase Plans (ESPP), and Restricted Stock Units (RSU) provided by companies to their employees through overseas holding companies. Here are the key highlights:</span></p><ol start="1"><li><span><strong>No GST on ESOP/ESPP/RSU</strong>: The Circular clarifies that the transfer of securities or shares (ESOP/ESPP/RSU) by the foreign holding company directly to the employees of the domestic subsidiary company is not considered a supply of goods or services under the CGST Act. Therefore, GST is not leviable on such transactions.</span></li><li><span><strong>Reimbursement of Costs</strong>: When the domestic subsidiary company reimburses the cost of these securities or shares to the foreign holding company, it is done on a cost-to-cost basis without any additional fee, markup, or commission. This reimbursement is also not liable to GST.</span></li><li><span><strong>Additional Fee, Markup, or Commission</strong>: If the foreign holding company charges any additional fee, markup, or commission for issuing ESOP/ESPP/RSU to the employees of the domestic subsidiary company, such an amount is considered a supply of services and is liable to GST on a reverse charge basis.</span></li><li><span><strong>Uniform Implementation</strong>: Suitable trade notices should be issued to publicize the contents of this Circular and ensure uniform implementation across field formations. Any difficulties in implementation should be reported to the Board.</span> <a href="https://cms.plasament.com/storage/shubham-pathak/circular-no-213-07-2024.pdf">circular-no-213-07-2024</a><br> </li></ol>