Service Tax on Expenses Incurred By Foreign Holding Company and Recovered from Subsidiary Company in India

[HImanshu Singh]

There is a subsidiary in India and its foreign holding company located in UK. Now subsidiary is incurring different cost for holding company such as
– ERP Software development done by foreign Company
– buying air tickets for the holding company personnel travelling to India for the project of holding company.
– Incurring legal expenses for the holding company
– incurring advertisement expenses for the holding company

In all the above expenses there is no profit margin in reimbursement invoice raised.

Subsidiary Company is Just Paying its Share on the Expenses and Booking those Expenses in PL

What is the Liability of Service Tax on Such Expenses incurred by Foreign Company.

AI Summary

Foreign Company Liable for Service Tax on Expenses Incurred Through Indian Subsidiary, Including ERP and Travel Costs. A foreign holding company based in the UK incurs various expenses through its subsidiary in India, including ERP software development, travel, legal, and advertisement costs. These expenses are reimbursed without a profit margin, and the subsidiary records them in its profit and loss account. The query seeks to determine the service tax liability on these expenses incurred by the foreign company. The response suggests that service tax is applicable to these transactions.