TDS compliance

Esop Startup Dpiit TDS Deferral ITAT
TDS deduction guide

Expert brief on Esop Startup Dpiit TDS Deferral ITAT for businesses, promoters, and individuals. Reconcile with latest notifications before filing.

Last fact-checked: 2026-06-25

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India specific

Dispute Details

Facts & Lower Court History

Facts: Indian employees of multinational corporations received RSUs or ESOPs of foreign parent companies, and faced tax disputes regarding perquisite valuation and double taxation.
Lower Court History: Various ITAT benches resolved disputes on whether the vesting creates taxable perquisite in India, and how Foreign Tax Credit (FTC) is computed.
Key Issues: How to value foreign shares for perquisite tax, and whether failure to report these assets in Schedule FA triggers the Black Money Act penalty.

Court Ratio

Perquisite Taxation: The value of RSUs/ESOPs is taxed as salary perquisite under Section 17(2) based on the FMV of the shares on the date of exercise/vesting.
Foreign Tax Credit (FTC): Under DTAA, employees are entitled to claim credit for taxes paid abroad on the same shares, subject to filing Form 67.
Schedule FA Penalty: Failure to report foreign assets/shares in the ITR triggers a mandatory ₹10 lakh penalty under the Black Money Act, even if no tax was evaded.

Key Evidence

Vesting & Exercise Statements: Documentation showing the number of shares vested, date, and FMV in foreign currency.
Form 16: Salary certificate showing the perquisite value included and taxed in India.
Form 67 & TRC: Proof of tax deducted abroad and treaty residency filings.

Action Points

Declare in Schedule FA: Ensure all foreign shares, RSUs, and stock accounts are reported in Schedule FA of the ITR-2 or ITR-3.
File Form 67 Timely: File Form 67 online before the ITR due date to secure the Foreign Tax Credit and avoid disallowance.
Reconcile FMV: Obtain certified valuation reports for unlisted foreign shares to avoid perquisite valuation disputes.