The matter of goods and services tax (GST) on salaries paid to expats by Indian subsidiaries of multinational corporations (MNCs) refuses to die down.
After the verdict of the Supreme Court on taxing reimbursements paid by Indian subsidiaries to parent companies for such payments, the Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (Cestat) recently pronounced a split verdict on the different aspects of these payments.
The issue in the recent case relating to Nissan Motors India in Chennai Cestat was a bit different because part of the emoluments was paid by the foreign company and the rest by the Indian company directly to overseas employees on deputation to India.
While the judicial member held that the Indian salary and other allowances paid directly by the taxpayer to secondees could not be taxed, the technical member ruled such payments were to be included in the taxable value.
Pratik Jain, leader, indirect tax, PwC India, said given the split verdict, the matter would be referred to the third member and industry would await the outcome because the principles of service tax (which the case pertains to) would apply under the GST regime.
Read more at: business-standard
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