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kanika gupta (company secretary)     25 November 2011

Service taax on deputation of employees

There is deputation of certain employees by a holding company to its subsidiary company for a certain time period. During the period of deputation , salary to the deputed employees is paid directly by the subsidiary company to those employees. There is no re-imbursement made to holding company and neither any bill is raised by holding for such deputation of employees to subsidiary. Would such transaction come under the ambit of service tax?

Pls clarify...



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 2 Replies

V. VASUDEVAN (LEGAL COUNSEL)     26 November 2011

No. Deputation is a routine course of deployment of emplyees inter se parent and subsidiary companies. In the event the parent is paying the salaries of the deputees and billing/debiting the subsidiary, then the service tax would arise.

vasudevan

kanika gupta (company secretary)     27 November 2011

Pls elaborate on this... why service tax is not applicable in case salaries are directly paid by the subsidiary company to the dputed employees and not re-imbursed to the holding company.


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