Reverse charges on expenses incurred on visit to usa

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Ashit Malhotra (Querist)
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14 September 2017 If an employee of an LLP goes to USA on a business visit and spend on travel,air fare,Hotel rent,food etc
Does the LLP needs to pay reverse charges.?
Will it be considered fringe benifit for employee ?

Ashit Malhotra

Ashit Malhotra (Querist)
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14 September 2017 If an employee of an LLP goes to USA on a business visit and spends on travel,air fare,Hotel rent,food etc in USA
Does the LLP needs to pay reverse charges.? Will it be considered fringe benifit for employee ?
Read more at: https://www.caclubindia.com/experts/reverse-charges-on-expenses-incurred-on-visit-to-usa-2569614.asp

Aashok Kumar Sharma online

Aashok Kumar Sharma

(Expert)
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22 July 2025 Great question about GST reverse charge and fringe benefits on foreign business travel expenses! Here’s a clear explanation:

1. Reverse Charge on Expenses Incurred Abroad (USA trip):
Under GST, import of services is taxable under reverse charge.

If your LLP receives services from outside India (like air travel, hotel, food services in USA), reverse charge is applicable on those imported services.

The LLP must pay GST under reverse charge on the value of those services (airfare, hotel, food, etc.).

This means LLP is liable to pay GST on these foreign services even if the supplier is located outside India.

However, there are some practical considerations:

Air travel services are generally covered under “import of service” and attract reverse charge.

Hotel rent and food services provided abroad by foreign suppliers are also imported services, so reverse charge applies.

You should determine the value of these services as per GST rules to calculate GST liability.

2. Fringe Benefit Tax (FBT) / Taxability on Employee:
Expenses on business travel by employees are typically business expenses.

These are not treated as fringe benefits or taxable perquisites for the employee, provided they are for official business.

If the trip is personal or partially personal, the value of personal use portion may be treated as a perquisite and taxed accordingly.

So, business trips for official purposes do NOT attract fringe benefit tax or perquisite tax.

Summary Table:
Aspect Applicability / Treatment
GST on air travel (foreign) Yes, reverse charge on import of service
GST on hotel/food (foreign) Yes, reverse charge on import of service
GST payment liability LLP under reverse charge mechanism
Fringe benefit tax on employee No, if official business travel; yes if personal benefit

Action points for LLP:
Maintain detailed records of foreign services availed.

Calculate GST liability under reverse charge and pay GST accordingly.

Claim Input Tax Credit if eligible.

Ensure business travel is well documented to avoid fringe benefit tax issues.

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