Multinationals that allotted employee stock options (esops) to their India employees have come under the taxman's lens for tax applicability on these transactions. The tax department is questioning the Indian arms of multinationals on withholding tax when they make such payments to their parents. In most cases, employees around the world get stock options in the multinational's parent company, which is located outside India. "Many multinationals allocate global esops to employees and they tend to charge this amount to their Indian entities. The tax department is questioning whether any tax should be withheld on this amount when it's paid back to the foreign entity by the Indian entity," said Shefali Goradia, partner at Deloitte.
