Outward Remittance Purpose Code - Company based out of Dubai

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A company based in Dubai is seeking guidance on the correct RBI purpose code for outward remittances to a UAE-based HR company. They need to pay for payroll services for employees seconded to the UAE for project work. The HR company is processing the payroll, and the original company wants to reimburse the salary costs. They are unsure whether to use a code for services or salary reimbursement, as using 'S1099 Other services' was rejected by their bank.

Harsh Shah

Harsh Shah (Querist)

24 November 2022 Hi,
We have sent a couple of employees to UAE for Project work, and we have hired one of the Human Resource companies based out of UAE to process the payroll of those employees, as it is mandatory for them to get the salary from the UAE company.
Now, the above employees will be on the payroll of the HR company for 3 months, and we want to pay the salary costs to the HR company we are not able to figure out which RBI purpose code should be used for these kinds of transactions while remitting the payment from the bank.
We tried using S1099 Other services not included elsewhere, but this was rejected by our bank.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

24 November 2022 You have hired an UAE company for services as per contract. So, check code for the service.

Harsh Shah

Harsh Shah (Querist)

24 November 2022 Correct, Sir, it is a service. But at the same time, it's just reimbursement of salary, and we have got an invoice of reimbursement for salary. If it's service, then there would be a TDS deduction, right? But as it's just a salary reimbursement, there won't be TDS under 195.

Hence, we are confused about which RBI purpose code to be used for this remittance.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

24 November 2022 You are not paying salary to the company!!
Though it may be reimbursement, but for payment to company is for their service utilized.

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