Latest Expert Exchange Queries

GST Demo Service software link:
Username: demouser Password: demopass
Get your inventory and invoicing software GST Ready from Binarysoft
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing | GST - Goods and Services Tax
Popular Search: cpt :: ACCOUNTING STANDARD :: form 3cd :: empanelment :: due date for vat payment :: Central Excise rule to resale the machines to a new company :: VAT RATES :: VAT Audit :: list of goods taxed at 4% :: ACCOUNTING STANDARDS :: TDS :: ARTICLES ON INPUT TAX CREDIT IN VAT :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: articles on VAT and GST in India :: TAX RATES - GOODS TAXABLE @ 4%
News Headlines »
 What if you forget to verify your Income Tax return?
 TDS on rent and other tax tasks to complete before March 31
 5 income tax changes which will come into effect from April 1, 2018
 Why you shouldn't be a last-minute tax filer
 How to calculate income tax for this assessment year on Moneycontrol
 6 Tax notices you may get and how to cope with them Income Tax Notice
 Deadline to pay advance tax ends tomorrow: Here is a step-by-step guide
  Central Goods and Services Tax (Second Amendment) Rules, 2018
 Income Tax Return Filing Deadline: Waiver On LTCG Tax To End On 31 March. Details Here
 Income tax returns (ITR) filing: Top mistakes that can be very costly
 Income Tax Return (ITR) filing: 6 last-minute things you can still do to save tax for FY17-18

Salary paid to hired foreign staff is taxable here
December, 04th 2006

From now, Indian companies hiring employees from foreign companies have to pay tax on the compensation paid to the foreign entity, following a ruling by the Authority for Advance Ruling (AAR), in the case of AT&S India.

AAR, which interpreted such payments as fees for technical (FTS) which are taxable in India, dismissed AT&S contention that such payments were in the nature of reimbursements of cost that do not fall under the classification of FTS.

In this case, AT&S Austria has sent in its employees to its Indian subsidiary AT&S India for carrying out work in India. According to the agreement between the two companies, the Indian company would reimburse partial cost of the salary of the employees sent by the Austrian company.

AAR held that such reimbursements are FTS and hence tax can be deducted in India, while making payment to the foreign company. The Indian company had two agreements with the foreign company, one for foreign collaboration and the other for secondment of employees.

Under the second agreement, the foreign company was assigning employees to the Indian company for operational purpose. Part of employees salary was paid by the Indian company, while the other part was paid by the Austrian company. At the same time, the Austrian company retained the right to replace any employee as and when it wishes.

It was also clear in the agreement that the Indian company would not pay any amount other than the cost of the salary of the employees to AT&S Austria.

Putting together all these facts, AAR concluded that the employees actually belong to the foreign company and hence the payments made by the Indian subsidiary to AT&S Austria is, in fact, FTS.

AAR examined the definition provided under the Indian Income Tax Act before arriving at its conclusion. The I-T Act covered considerations for rendering managerial, technical or constancy services except when the consideration is the income of the recipient chargeable under the head salaries. The treaty between the two countries, too, makes exception to such payments in the form of salaries.

However, AAR held that the core issue was not salaries to employees which has already suffered tax, but the compensation AT&S Austria was entitled to receive. In this case, AAR pointed out that the recipient was AT&S Austria and not the employees.

Further, compensation was not chargeable under the classification of salaries by the Austrian revenue. On these grounds, AAR ruled that payments were covered under the head, FTS.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2018 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Multi-level Marketing MLM India Affiliate Marketing Affiliate Marketing Software MLM Software MLM Solutions Multi level marketing solutions MLM Servi

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions