In the contemporary global economy, to leverage on talent available within the group companies, employees are frequently seconded by group companies. The issue of levy of indirect tax on such cross border secondment arrangements had settled over the last few years by way of multiple favorable rulings. Thus, in cases where seconded employees were working under the control and supervision of the Indian company and salary was being paid in India after deducting taxes as per the Indian tax laws, largely, the position that was taken that the seconded employees have employer employee relationship with Indian company and no indirect tax was applicable on such transactions. Recently, the Supreme Court of India in the matter of Northern Operating Systems held that one factor is not sufficient to conclude that employer employee relationship exists between the secondee and the Indian company. Multiple factors such as salary payment, nature of task assigned, responsibility for task performed, eligibility to terminate employment, duration of the secondment, overall arrangement between Indian and overseas company have to be considered. Join our Deloitte professional as they discuss key impact and recent ruling of secondment arrangements and the way forward.

(Live presentation was aired on 7 July 2022)