Reimbursement of payroll costs

This query is : Resolved

RcorpIndia (Querist)
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23 November 2022 Hi,
The director of an Indian entity has started another company in Dubai.

This Dubai entity has utilized some employees on the rolls of the Indian entity to work for the Dubai entity.

The salaries for these indian employees for the duration that they were working for the Dubai entity have been processed through the Indian Entity.

Now, we want to transfer these employees legally to Dubai Entity.

And, Dubai Entity wants to reimburse the Indian entity for the salaries for these employees for the period they were on the rolls of Indian entity but were working for the Dubai Entity.

What is the best hassle free way to settle this payment for these employees with the Indian Entity?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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23 November 2022 Services provided by one establishment of a person to another establishment of the same person, considered as establishments of distinct persons as per Explanation 1 of section 8 of IGST Act, cannot be treated as export.
IGST applicable on such reimbursements.

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