Secondment Of Employees And Its Tax Implication As Manpower Supply

Secondment is a common practice amongst global entities and corporations having presence in various jurisdictions through group entities. Such secondment practice, depending upon the business requirements of the host entity, usually involves deployment of highly skilled employees of the overseas entity well-versed with the workings/practices of the overseas entity which can be effectively implemented in the host entity's operations. Services provided by an employee to the employer in the course of employment are outside the ambit of the definition of 'service' and typically, the host Indian entity tries to qualify services received through these seconded employees outside the ambit of taxable service. Even if an amount is paid to the foreign group entity as reimbursement of salary of the seconded employees, the host entity holds that the reimbursement cannot be construed as consideration for supply of manpower services. This view is bound to change considering the