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Reimbursements to overseas entity under secondment agreement not liable to tax

Global Tax Update : June 2017 / India

A High Court in India has ruled that reimbursement of salary costs to the overseas companies under a secondment agreement would not be subject to withholding taxes in India. (Global Tax Update:June 2017/India)

1. Reimbursements to overseas entity under secondment agreement not liable to tax

An Indian company entered into an agreement with its shareholder (‘secondment agreement’) whereby it was provided personnel to carry out the functions in the area of management, setting up of business, property selection and business operations, etc.

In accordance with the terms of the secondment agreement, the Indian Company remitted certain amount to the overseas shareholder towards salary cost of the seconded employees. No taxes were withheld from such payments

2. Quoting of Aadhaar in tax returns not mandatory for non-Indian citizens and non-residents – notification issued

Recent amendments to the domestic tax laws* require every person who is eligible to obtain Aadhaar number:

  • To quote the Aadhaar number in the income tax return to be filed on or after July 1, 2017;
  • To communicate the Aadhaar number to the prescribed authority in respect of Permanent Account Number (‘PAN’) allotted as on July 1, 2017;
* Income tax Act, 1961


>> Click for Japanese [出向契約に基づく外国親会社への給与コスト立替額の精算金の支払は課税対象外 ほか]

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