Expat services

CA Pradeep Jain (Job - Finance Department)   (69 Points)

24 February 2009  

hi all

Suppose a foreign company (ABC) has deputed the expats (their employees) in Indian subsidiary company (XYZ) . they are still on the rolls of ABC. They are discharging their duties in India for XYZ & getting the salary directly in their home country from ABC. They get the salary net of Income tax & income tax is to be borne by ABC.

In return ABC raises invoices on XYZ & get reimbursement. I want to know different tax (income tax, Service tax & FBT) implications on various transactions involved in it.

1) When XYZ reimburses the money do the have to deduct TDS as it is just reimbursement?

2)Shall these reimbursement will be considered as proffesional fees & servcie tax will be charged accordingly?

3)regarding Income tax of Expat employee, as it is borne by ABC, will the income be grossed up for the purpose of Income tax calculation?

4)when ABC has to pay Income tax of expat to the Indian revenue ,they will transfer the funds to XYZ & XYZ will accordingly make the tax payment . what would be the nature of this payments ( e.g. in the nature of TDS deposited or it will be paid alongwith return of Concerned employee)

If I am not clear at any point or you think this is not sufficient information please let me know.

Thanks for your help in advance.