• Service: Tax, International Executive Services, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 7/31/2013

India - Extended return deadline; ESOP discount as deductible business expense 

July 31:  The KPMG member firm in India prepared reports on the following developments (read the July 2013 reports by clicking on the hyperlinks provided below):
  • Due date for certain income tax returns (originally due 31 July 2013) extended to 5 August 2013 - The Central Board of Direct Taxes extended the due date for filing income tax returns from 31 July 2013 to 5 August 2013 in respect of financial year 2012-13 for certain specified taxpayers—e.g., non-company taxpayers and taxpayers who are not required to have their books of accounts audited including individuals and Hindu Undivided Family, Trusts.

    Read a July 2013 report [PDF 146 KB]

  • Revised process for social security “certificate of coverage” for outbound employees - India has signed social security agreements with other countries, to achieve an exemption from social security contributions in the host countries for outbound employees, provided that the outbound employees contribute to social security in India. To obtain the exemption, an outbound employee must obtain a “certificate of coverage” from the EPFO, and the certificate serves as a proof of social security contribution in India. A recent circular provides future “certificates of coverage” will be issued by the local regional provident fund commissioner.

    Read a July 2013 report [PDF 208 KB]

  • Discount on ESOP issuance is allowable business deduction during the vesting period - The Special Bench of the Bangalore Income-tax Appellate Tribunal held that a discount on the issuance of employees stock option plans (ESOPs) is a deductible business expenditure because: (1) it represents consideration/compensation for services rendered by employees; and (2) it is an ascertained liability, since the employer incurs obligation to compensate the employees over the vesting period, notwithstanding the fact that the exact amount of discount is quantified only at the time of exercising the options.

    The case is: Biocon Ltd. Read a July 2013 report [PDF 494 KB]

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