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: list of goods taxed at 4% :: VAT Audit :: form 3cd :: Central Excise rule to resale the machines to a new company :: VAT RATES :: cpt :: due date for vat payment :: ARTICLES ON INPUT TAX CREDIT IN VAT :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: empanelment :: articles on VAT and GST in India :: ACCOUNTING STANDARDS :: TAX RATES - GOODS TAXABLE @ 4% :: ACCOUNTING STANDARD :: TDS
« From the Courts »
 Order of a Four-Member Appellate Authority constituted under Chartered Accountants Act is Valid: Delhi HC
 Emami Infrastructure Ltd vs. ITO (ITAT Kolkata)
  Anand Agarwal vs. Vilas Chandrakant Gaokar (Bombay High Court)
 Bar Council of India vs. A. K. Balaji & Ors (Supreme Court)
 ITO vs. Venkatesh Premises Co-op Society Ltd (Supreme Court)
 Pr CIT vs. Amphenol Interconnect India P. Ltd (Bombay High Court)
 Pr CIT vs. Amphenol Interconnect India P. Ltd (Bombay High Court)
 Anand Agarwal vs. Vilas Chandrakant Gaokar (Bombay High Court)
 Principal Commissioner Of Income Tax (Central)-I Vs. Smt. Ritu Singal
 Vinod Kumar Gupta Vs. Deputy Commissioner Of Income Tax Central Circle-17
 How you can gift and still save tax on top of HRA, tuition fee, more Income Tax Returns (ITR) filing top hack

Salary: no tax for cos on reimbursement
February, 12th 2009

A subsidiary of a foreign firm that hires employees on a secondment from the parent company will not have to pay tax on the salary reimbursement of the employee, according to a recent ruling by an Income-tax Appellate Tribunal in Bangalore.

Secondment is the transfer of an employee for a temporary assignment elsewhere.

The tribunals ruling last week came on an appeal by software development firm IDS Software Solutions (India) Pvt. Ltd, or Idsi, a subsidiary of the US-based IDS Inc.

Idsi had entered into a secondment agreement with its parent firm, following which it hired an employee from the US firm. The seconded employee was appointed managing director of the Indian subsidiary. As per the agreement, Idsi was to reimburse the salary, bonus and other expenses incurred by the employee to the US firm.

But the income-tax authorities imposed a tax on the remittance from the subsidiary to the parent firm.

The assessing officer held that the remittance was reimbursement of fees for technical services and not a salary because there was no employer-employee relationship between Idsi and the seconded employee. Companies in India dont have to pay tax on reimbursement of salaries but royalty and fees for technical services are taxable.

Idsi contended that a reimbursement to its US parent should not be taxed as the company had already paid the tax in India. Idsi moved the tribunal after its appeal was dismissed by the Commissioner of Income-tax (Appeals).

In its order, the tribunal held that Idsi had already deducted tax from remuneration paid to the employee.

It also said that Idsi was the economic employer since the services were rendered by the seconded employee to Idsi and whose salary was borne by IDSI.

This is an important ruling for foreign companies which have subsidiaries in India and which send employees on secondment agreements, said Vikas Vasal, executive director with consultant KPMG India Pvt. Ltd. It has always been a matter of debate whether reimbursement should be treated as reimbursement of salary or fees for technical services. The ruling has made it clear now.
The ruling fortifies the concept of an economic employer... This ruling has reiterated that in the case of foreign companies deputation, if the employee is under the supervision of the Indian entity even if the salary is paid by the overseas company and reimbursed later on, the Indian company is considered to be the employer, said Divya Baweja, partner with consulting firm BMR Advisors.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2018 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
SEO Company Search Engine Optimization Company US SEO Local SEO Company Website SEO Company Alabama SEO Company Alaska SEO Company Arizona SEO Company Arkansas SEO Company California SEO Company Colorado SEO Company Connecticut SEO Company Delawa

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