Employees sent on deputation to subsidiary/ associate companies (Service Tax)

[Guest]

Dear Sir,

Please advise us regarding Service Tax chargeability on Deputation of the employees to the Subsidiary company. The employees were send to the subsidiary/ associate companies in Nepal on deputation. Recovering costs on actual basis and were not retaining any amount out of the payment to the subsidiary/ associate companies. These recovered costs were in the nature of salary and other costs of the employees.

Hence please advise whether Service Tax will be liable to be paid by us under such circumstances.Thanks and regards.

AI Summary

Service Tax Not Applicable on Employee Deputation to Subsidiary with Cost Recovery; No Service Provider-Receiver Relationship Exists A query was raised regarding the applicability of Service Tax on the deputation of employees to a subsidiary company in Nepal, where costs, including salaries, were recovered without any profit. Multiple responses indicated that no Service Tax liability arises in such cases, as the deputation does not constitute a service provided, and there is no service provider-service receiver relationship. It was noted that this is a settled legal position supported by judicial precedents. However, one response cautioned about potential changes in definitions post-2012 and advised informing the tax department to avoid legal issues.