Service tax on Cost sharing amount related companies-reg

[N Balachandran]

Dear sir,

Could you pl clarify ,the Salary paid to an employee whose salary is debited to among the group companies on cost sharing basis, is liable for Service tax or not?.

Regards

N.Balachandran

AI Summary

Debate on Service Tax Applicability for Shared Employee Salaries: Section 65B(44) Clarifies Employer-Employee Exemption A discussion on whether salary paid to an employee, shared among group companies, is subject to service tax. One participant cited Section 65B(44) of the Finance Act, 1994, stating no service tax applies if an employer-employee relationship exists. Another argued that post-negative list, salary recovery from group companies is taxable. A legal case was referenced, indicating that deputation of employees to subsidiaries, without a profit element, does not constitute a taxable manpower supply service. The importance of agreements to clarify cost-sharing and control was emphasized to avoid service tax liability.