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Cost re-imbursement under secondment agreement not taxable

Global Tax Update : May 2017 / India

An Indian Tribunal has held that the cost reimbursement payment made by the taxpayer to its overseas holding company under an employee secondment agreement, is not chargeable to tax in India. (Global Tax Update:May 2017/India)

1. Cost re-imbursement under secondment agreement not taxable

An Indian Tribunal* has held that the cost reimbursement payment made by the taxpayer to its overseas holding company under an employee secondment agreement, is not chargeable to tax in India.

Pursuant to the Secondment Agreement entered into between the taxpayer and its overseas holding company, certain employees were placed by the overseas holding company to function and act under the control, direction and supervision of the taxpayer. The salaries of the seconded employees were paid directly by the overseas holding company. The salary cost was re-imbursed by the Indian taxpayer without withholding any taxes.

* Ahmedabad bench in the case of Burt Hill Design (P.) Ltd [2017] 79 taxmann.com 459.

2. Liberalization of e-Visa regime

With an aim to stimulate economic growth, increase earnings from export of services such as tourism, medical value travel, travel on account of business and to make India an attractive destination for foreign direct investment, the government of India (‘GOI’) has approved the e-Visa scheme.

This seeks to liberalize, simplify and rationalize the visa regime with effect from April 01, 2017. With this, the existing ‘e-Tourist visa’ is replaced by the ‘e-Visa’ regime.

3. E-proceedings before tax authorities

In furtherance of the government’s initiative to bring in paperless assessment as notified earlier*, the Central Board of Direct Taxes (‘CBDT’) has notified procedures, formats and standards for E-proceedings for communication between the taxpayer and the tax authorities.

Additional procedures, formats and standards have been issued by the CBDT for ensuring secured transmission of electronic communication through the e-filing account of the taxpayer on the designated tax department website: https://incometaxindiaefiling.gov.in.

* Notification no. 2/2016 dated February 3, 2016


>> Click for Japanese [出向契約に基づくコスト支払は非課税 ほか]

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