Secondment of employees - the tax controversy continues

The taxability of salary reimbursement for seconded employees has been debatable with various contrary judicial precedents. The recent Supreme Court decision regarding the applicability of service tax/GST provisions on reimbursements of salary of seconded employees has aggravated the dispute further.

In a secondment arrangement, an employee of an overseas company is deputed for a specified period to an Indian company to work for the Indian company. Such arrangements are generally between group companies that want to leverage personnel talent available elsewhere to set up, expand, and grow Indian businesses.