salary paid to non resident employee in canada

[Satbir singh wahi]

whether there is reverse service tax liability, if company pays salary ₹ 175000 P.M . to employee resident in canada.

[Rajagopalan Ranganathan]

Sir,

In my opinion, the salary paid to a non-resident will be treated as amount paid for rendering service to you. It will amount to import of service. Hence you are liable to pay service tax on the salary paid to non-resident employee.

[Ganeshan Kalyani]

Sir, with due respect to Sri Rajagopalan Sir, my view is that , there exist employer-employee relationship which is under exclusion clause of the definition of service. Service tax is not applicable. I also welcome views of my experts collegues. Thanks.

[KASTURI SETHI]

I agree with Sh.Ganeshan Kalyani, Sir.

[Satbir singh wahi]

Thks Sir

What documents required to prove employer employee relation so reverse charge incidence is not there. Pl Guide.

[Ganeshan Kalyani]

Sir, in your query you have mentioned that service provided by an employee. That means there would be appointment letter or salary slip etc. This would suffice to satisfy the auditor. Thanks.

[KASTURI SETHI]

Sh. Ganeshan Kalyani Ji,

Yes, Sir. I would term the payment an offshoot of appointment letter. Appointment letter is a documentary evidence of employer-employee relationship.

[Satbir singh wahi]

Thanks Sir

AI Summary

Employment relationship may exclude reverse service tax liability for salary paid to non-resident employees, contested by import-of-service view.
Whether salary paid to a non-resident employee attracts reverse charge service tax is disputed: one view treats such salary as an import of service subject to reverse charge, while the opposing view relies on the statutory exclusion for an employer-employee relationship to argue the payment is not a taxable service; documentary evidence like an appointment letter or salary slips is cited as proof of employment to support the exclusion.