Bär & Karrer AG, a leading Swiss law firm, sought comprehensive guidance on implementing an equity participation plan for employees in its client’s Swiss and Indian entities. Majmudar & Partners provided detailed advice on the treatment of shares, options, dividends, social security taxes, valuation requirements, and payroll obligations to ensure compliance with Indian regulations.
Facilitating the Transaction
Majmudar & Partners played a pivotal role in this process by providing the following advice:
- Equity Instrument Structuring: Advised on the classification and treatment of various equity instruments, including shares and stock options, to be allocated to Indian subsidiary employees, ensuring compliance with the Income Tax Act, 1961.
- Tax Implications Analysis: Assessed the tax liabilities associated with dividends and cash payouts under the equity participation plan, ensuring adherence to Indian tax laws and mitigating any double taxation.
- Social Security Contributions Guidance: Clarified the applicability of Indian social security taxes, such as provident fund contributions, in relation to equity-based compensation, ensuring compliance with the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952.
- Valuation Compliance Assistance: Provided guidance on the valuation requirements for equity instruments, ensuring adherence to the fair market value determination required as per Rule 11UA of the Income Tax Rules, 1962.
- Payroll and Withholding Obligations Advisory: Outlined the payroll processing requirements and tax withholding obligations for the Indian subsidiary, ensuring accurate reporting and remittance in line with Indian tax regulations.
This transaction enabled Bär & Karrer AG to implement a compliant and efficient equity participation plan for the employees of the client’s Indian subsidiary. Majmudar & Partners’ comprehensive guidance helped the company smoothly align with Indian tax and regulatory frameworks.
Majmudar & Partners specializes in advising multinational corporations on structuring employee equity participation plans in compliance with Indian laws. Contact us today to ensure your employee compensation strategies are effectively tailored to the Indian regulatory environment.