Salary from HO to Branches
This query is : Resolved
15 May 2025
We have many branches in all over India with gst registration. Our HO is in Maharashtra.
We are paying salary from HO to all over India's employees.
Can we are liable to adopt cross charges.
If yes under what valuation? or actual salary amount.
What percentage of tax.
Whether Sgst + cgst or Igst
We are paying salary from HO to all over India's employees.
Can we are liable to adopt cross charges.
If yes under what valuation? or actual salary amount.
What percentage of tax.
Whether Sgst + cgst or Igst
12 August 2025
1. Can HO charge salary cost to branches (Cross Charges)?
Yes, HO can allocate or recharge the salary expense to its branches for better cost control and accounting.
This is usually done by passing an internal accounting entry called "cross charge" or "reimbursement" from HO to branches.
2. What valuation to adopt?
The valuation should be the actual salary amount paid by HO.
No markup or profit margin is usually charged on such internal recharges.
If HO is simply passing on the actual salary expense paid, valuation = actual cost.
3. Is GST applicable on salary recharge between HO and branches?
No GST is applicable on salary recharges between HO and branches because:
Salary is a personal service, not a supply of goods or services between distinct persons.
Branches and HO are usually considered the same legal entity (same GST registration or related registrations).
Even if branches have separate GST registrations, salary recharges are internal expenses and do not attract GST as per law.
4. If GST is applicable, what type? SGST+CGST or IGST?
If for some reason salary recharges were treated as supply (rare), then:
If HO and branch are in the same state, CGST + SGST would apply.
If HO and branch are in different states, then IGST would apply.
But in general, salary recharges are not subject to GST.
Yes, HO can allocate or recharge the salary expense to its branches for better cost control and accounting.
This is usually done by passing an internal accounting entry called "cross charge" or "reimbursement" from HO to branches.
2. What valuation to adopt?
The valuation should be the actual salary amount paid by HO.
No markup or profit margin is usually charged on such internal recharges.
If HO is simply passing on the actual salary expense paid, valuation = actual cost.
3. Is GST applicable on salary recharge between HO and branches?
No GST is applicable on salary recharges between HO and branches because:
Salary is a personal service, not a supply of goods or services between distinct persons.
Branches and HO are usually considered the same legal entity (same GST registration or related registrations).
Even if branches have separate GST registrations, salary recharges are internal expenses and do not attract GST as per law.
4. If GST is applicable, what type? SGST+CGST or IGST?
If for some reason salary recharges were treated as supply (rare), then:
If HO and branch are in the same state, CGST + SGST would apply.
If HO and branch are in different states, then IGST would apply.
But in general, salary recharges are not subject to GST.
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