GST Implications On Secondment Of Employees By Overseas Companies

INTRODUCTION

The issue of taxability of secondment of employees was more or less settled in the erstwhile service tax regime. However, a disbalance in the position taken by the industry and experts on the secondment of employees by an Overseas Company to an Indian Company has crept in with the decision of the Supreme 1 Court in Northern Operating Systems case¹. The Supreme Court decision has unsettled the still water on taxability on the secondment of employees by an Overseas Company to an Indian Company, where the salary is disbursed by the Overseas Company and the same is reimbursed by the Indian Company without any markup.

In the erstwhile regime, service tax authorities have always contended that this arrangement of secondment of employees to Indian entities from overseas group companies is nothing but receipt of manpower supply services and hence taxable under reverse charge in the hands of the recipient of such service i.e. the Indian host company. The