Tax On Cross Border Secondment Arrangements In India - A Disarrayed Matrix

1.  Background

Post the economic reforms of 1991, the Indian economy was opened up to integrate with the global market, which involved cross border movement of technology, personnel, capital, equipment etc. The taxation of such cross border movement has since then, been a grey area and has come up for adjudication before the Indian courts many a times. However, all such areas of concerns even after judicial consideration of so many years are still a matter of debate and have not yet attained certainty.

Amongst others, the issue of taxation of cross border deputation of employees in today's environment is most lustrous and critical. Any kind of error or ignorance in the same may result in huge tax consequences on foreign corporate and Indian arm thereof. The quantum of tax consequence in such a case may even go upto levy of India taxes on global profits of such foreign corporate with applicable penalties under Indian domestic tax legislation.