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Recharge employee cost

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K R Sivaraman

37 Points Posted on 17 July 2026

Hi All,

I am working in the Indian subsidiary of a UK based MNC. Our UK company wants to recruit a person based in India. He will be working for the corporate finance team at UK. The UK office has asked us to recharge his costs to UK.

My question are as follows

1. Is it legally OK to do this. If yes, will a transfer pricing agreement be enough.

2. Is such arrangement covered under any statute.

Appreciate your input on this as we are doing it for the first time and want to grt it right.

Sivaraman

7708090010

Replies (1)

Aashok Kumar Sharma

Finance/Compliance Consultant

69816 Points Posted on 18 July 2026

Legality: The arrangement is legally valid, but it should be structured as an Inter-Company Service Agreement featuring the actual employee cost plus an arm's length mark-up to satisfy Indian Transfer Pricing rules.
GST Treatment: It qualifies as a Zero-Rated Export of Service (0% GST), provided you file an LUT on the portal and receive the payout from the UK office strictly in convertible foreign exchange backed by an FIRC.