Import of service

Queries 509 views 3 replies

Hi All

 

Here's a summary of a practical situation I am facing in an audit. Please provide inputs on whether it is an import of service:

-- Holding company is in United Kingdom.

-- Subsidiary company is in India

-- Holding co. shifts some of its employees to the subsidiary co.

-- Subsidiary co. has an employment contract with these employees

-- The salary of these employees is paid by the Holding co. in UK. Subsidiiary co. pays an allowance in India to these employees. However, PF and TDS etc is calculated on the entire salary (paid in UK as well as India)

-- The subsidiary co. reimburses the salary paid by the Holding co. to these employees.

 

NOW, whether this reimbursement made by subsidiary company is an import of service???

 

Thanks in Advance

 

Replies (3)

Remittance of salary from Holding to Subsidiary is an Import of Service.

It is a form of remittance of salary although no actual transfer has taken place.

Hi Prateek

 

Could you please elaborate.. I did not understand..

Hi,

Holding Co. has a Permanent Establishment in India vide the Subsidiary Company. First Condition is fulfilled.

Next, Recipient of service i.e. Subsidiary Co. is in India. Second Condition fulfilled.

Last, Service is provided by employees in India. Third condition is also satisfied.

Only thing confusing is that no actual payment is made from UK to India as salary.

But, its just a form of remittance for the same.

So, i think it is an IMPORT of service.


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