CA. Shivam Agrawal
Quick Summary
As Indian businesses continue to expand their global footprint, outward secondment arrangements have become increasingly common. These arrangements involve the temporary transfer of employees from an Indian entity to an overseas entity, often raising complex questions around tax and GST implications
Daily Limit Reached
You have reached your daily limit of 2 Free Articles
Subscribe to CCI PRO for unlimited access
Why Upgrade to CCI PRO?
- No Ads
- WhatsApp Broadcasts
- Daily E-Newsletter
- Unlimited Articles Access
BEST VALUE
2 YEAR PLAN
3,499
(Inclusive of GST)
1 YEAR PLAN
1,999
(Inclusive of GST)
View all CCI PRO benfits
Already a PRO member? Login here for an ad-free experience.
FAQ :
An outward secondment arrangement involves an Indian company temporarily transferring its employees to an overseas entity, which can lead to complex tax and GST considerations.
A Service PE may be established if Indian employees work for an overseas entity for over 183 days in a fiscal year, or if they have a physical presence and perform non-preparatory activities, provided the lien on their employment remains with the Indian entity.
FTS applies to payments for technical services if the services make available technical knowledge or expertise, or involve the transfer of technical plans or designs. The 'make available' clause is crucial for FTS applicability.
DTAAs can influence the taxability of secondment arrangements by potentially providing for lower withholding tax rates or exemptions on FTS, or affecting the tax status of a Service PE.
Outward secondment may be considered an export of services from India, potentially qualifying for zero-rating under GST, provided certain conditions, like the supplier and recipient not being merely establishments of a distinct person, are met.
Businesses can optimise tax benefits by clearly defining terms, ensuring the lien on employment remains with the Indian entity, structuring reimbursements at arm's length, and maintaining accurate documentation.
CAclubindia
