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

[Asked by 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

Deputation of employees not a taxable service when only actual salary and costs are recovered, absent any markup or service relation.
Deputation of employees to subsidiary or associate companies where only actual salary and related costs are recovered without any markup is not treated as a taxable service; established precedents find no service relationship or consideration, so such recoveries are treated as reimbursements rather than supply of manpower, though applicability of earlier decisions to later legislative changes should be verified.