Respected all,
We hve received a project work in malaysia. we have employed a person for such work from malaysia and will pay his salary in USD from india. Will we be liable to GST for such transaction?
Kindly advise.
Project in malaysia, employed a malaysian personnel, GST implication.
Replies (1)
Hey! Here’s the GST perspective on your Malaysia project and paying a Malaysian employee from India:
Key Points on GST Implication:
-
GST is an Indian indirect tax on supply of goods/services within India.
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Salary payments to employees are not considered a supply of services, so salary paid to the Malaysian personnel does NOT attract GST.
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Since the employee is working in Malaysia and the salary is paid from India in USD, this is essentially an employment contract, not a supply of service by your Indian entity.
-
GST is not applicable on salary payments — no GST on salary or wages.
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However, if you were paying for services (like consultancy, contract services) to a foreign entity/person, then GST on import of services under Reverse Charge Mechanism (RCM) might apply.
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But since this is a direct employment relationship and salary payment, it falls outside GST scope.
Summary:
| Situation | GST Applicability |
|---|---|
| Salary paid to foreign employee | No GST applicable |
| Payment for services imported | GST may apply under Reverse Charge |
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