An Indian company (IC) loans/seconds its employees to a foreign company (FC). IC invoices FC and receives foreign currency. It adds an agreed mark-up to the actual cost of the employee. Will this be eligible for export exemption if: (a) loaned/seconded employees work from India? (b) if they work at the FC site abroad, or work at any other location outside India?
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Export of Service - Indian employees working for foreign company
Replies (1)
| This is a nuanced area. Here is the GST position: 1. Scenario A – Indian Company Providing Manpower to Foreign Client: If an Indian company (employer) seconds/deploys employees to work for a foreign company (client) and raises invoice on the foreign company for the manpower service — this qualifies as 'Export of Service' under Section 2(6) of IGST Act, provided: - Supplier is in India - Recipient is outside India - Place of supply is outside India - Payment received in convertible foreign currency - Supplier and recipient are not merely establishments of the same entity If all conditions are met: Zero-rated supply → file under LUT and claim ITC refund, or pay IGST and claim refund. 2. Scenario B – Individual Working Directly for Foreign Employer: If an individual in India is directly employed by a foreign company and receives salary in foreign currency — this is NOT a supply of service under GST (employment services are excluded from GST under Schedule III, Entry 1). No GST liability. 3. Scenario C – Secondment of Employee from Indian Entity to Foreign Entity: This has faced litigation — CBIC Circular 210/4/2022-GST clarified that secondment may or may not be export depending on whether the Indian entity has any employer-employee relationship during the period. 4. FEMA Angle: Also ensure FEMA compliance for foreign currency receipts — file Form 15CA/CB for repatriation. |
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