Taxation of Foreign Company ESOPs for Resident Indian

Dear All,

My query is regarding taxation of Foreign Company ESOPs for Resident Indian. A resident Indian has been given ESOPs of a Singapore Company which is parent & holding company of Indian company. Resident Indian is employee of Indian Subsidiary. I want to know what are various tax triggers at Singapore & India levels at various stages of ESOPs i.e. granting, vesting, exercising and sale of ESOPs. What are the tax implications for Indian Employer & Indian Employee.

Thanks in Advance.

asked Apr 25 '14 at 15:42 by Financepro 111


As company is not listed in Indian stock market and STT won't be paid on transactions, tax free gains won't be applicable here.

If employee decides to sell his shares within three years of purchase, it would be considered as short term capital gains and whole gains (selling price - purchase price) would be added to taxable income in India and taxed as per slab rates.

In case sale happens after three years, it would be long term capital gain. 20% income tax would be payable on such gains with indexation benefit. Tax can be saved by investing into residential property u/s 54F or into capital gain bonds u/s 54EC.

There won'd be any taxation on granting and vesting of stocks.

FBT (Fringe benefit tax) may be payable on exercising/buying stocks. It would be around 34% of current market value - exercise price.

There won't be any tax burden on employer because of this.

answered Apr 28 '14 at 13:30 by Pankaj Batra 5.2k320

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