Whether Service tax is liable to pay on reimbursement of exp.

[Yatin Bhopi]

Dear experts

We are Multinational company. Recruitment of officers for Indian subsidiaries done by our parent company situated in USA. Parent company hire Indian company to recruit officers by taking interviews and selection process. Recruitment agency raised bill to parent company (in the bill they mentioned all their PAN card and Service Tax registration number etc) and parent company pay their bill.

Our parent company recover this expenses from us as it is (they also provide us Indian recruitment agency’s bill for supporting)

Whether Service tax is payable by us? ( primarily there will be no Service tax liability on Indian recruitment agency, since this will be export of service to them)

AI Summary

Service Tax Liability Clarified: Indian Recruitment Agency Responsible for Tax on Services Provided to Parent Company. A multinational company inquires about the service tax liability on reimbursement of recruitment expenses. The parent company in the USA hires an Indian recruitment agency to recruit officers for its Indian subsidiary and pays the agency directly. The parent company then recovers these expenses from the Indian subsidiary. Experts in the forum clarify that the service tax liability lies with the service provider, the Indian recruitment agency, as the service is provided and enjoyed in India. The reimbursement between the parent and subsidiary is not subject to service tax.