Foreign employee stock options: Documentation, taxation and disclosure requirements in India

stocks of their parent companies listed abroad as part of their salary packages. Here's a look at the documentation, taxation and disclosure requirements in India for these stocks.Q.What are the types of employee stock options?

ESOP (Employee Stock Option Plan): The shares are allotted at a future date on the fulfilment of certain conditions, at a predetermined price. RSU (Restricted Stock Unit): The shares are allotted at a future date on fulfilment of certain conditions, at zero cost. ESPP (Employee Stock Purchase Plan): The shares are allotted at a future date on fulfilment of certain conditions, at a predetermined discount to the prevailing market price. Phantom shares: These aren’t actual shares, but mimic price movement of actual shares.

Q.Which documents are needed to assess the stock value for taxation?

Broker demat account statements: These are available with the foreign broker’s login. These give a clear view of stocks exercised and sold, dividend income, taxes withheld on dividend income, and closing balance of stocks at the end of the period. Employer’s stock option management portal: You can extract reports by ‘type’ and ‘status’ of employee stocks. These give a clear split of stocks vested in the relevant financial year, their fair market value on vesting date, amount paid by employee (if any) to exercise, sales made during the period, and exchange rate conversion in Indian rupee. Form 12BA: This is an annexure of Form 16. It depicts the gross value of exercised stocks as per their fair market value, reduced by the amount paid by employee, if any. It is shown as value of perquisites. Salary slips: Sometimes the stocks don’t vest evenly through the year. Salary slips show the exact month of vesting and Read more on economictimes.indiatimes.com