Quick Summary
In a recent turn of events, several Indian companies have found themselves entangled in a web of GST demand notices, particularly concerning cases where overseas employees have been deputed to work in India. This predicament stems from a significant judgment handed down by the Supreme Court, which ruled that the salaries of seconded employees deputed to Indian companies, reimbursed to the overseas entities, are subject to service tax. This landmark decision, delivered on May 19, 2022, in the cas
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FAQ :
Indian companies are receiving GST notices concerning the salaries of employees who have been deputed from overseas entities to work in India. This is due to a Supreme Court ruling that such reimbursed salaries are subject to service tax.
The Supreme Court ruled on May 19, 2022, in the case of Northern Operating Systems, that salaries of 'seconded employees' deputed to Indian companies, which are reimbursed to overseas entities, are subject to service tax.
The Supreme Court's order did not explicitly declare its applicability as retrospective. This is a point of consideration for companies reviewing their GST notices.
A 'seconded employee' is an individual deputed from an overseas head office or group company to work for an Indian subsidiary or affiliate. While working in India, they remain on the overseas entity's payroll, and their salaries are reimbursed by the Indian company.
Companies that have received GST demand notices are advised to carefully examine the specific details of their situation and devise a suitable course of action.
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