Dear Sir/ Madam,

 Please find herewith our captioned Newsflash which outlines the key regulatory and tax reporting requirements in relation to equity-based compensation schemes such as ESOPs, RSUs, ESPPs, and SARs, offered by foreign companies to group entity employees in India. 

 This Newsflash provides a detailed analysis of the income-tax implications for both employers and employees, including the applicability of withholding tax under Section 192, and the treatment of perquisites as part of salary income. It also provides an overview of the general capital gains tax provisions applicable upon the subsequent transfer of such shares and the obligations that arise under the Foreign Exchange Management Act (FEMA), including reporting under the new Overseas Investment framework. For instance, Indian companies must furnish Forms with OPI half yearly (Within 60 days from the end of half year i.e. Financial Year).

 The Newsflash further discusses employer and employee-level reporting obligations under Indian tax law, such as the requirement to report foreign assets in Schedule FA of the Income Tax Return, and the remittance-related compliance under the Liberalised Remittance Scheme (LRS) while clarifying the applicability of reporting obligations at various stages i.e. grant, vesting, and exercise.

 

RSM India Newsflash - Reporting Requirements wrt Equity based compensation schemes offered by Foreign Companies to the Indian Employees 13.pdf