Export of Services - Employees of Indian Company working for Foreign Company

[Kaustubh Karandikar]

An Indian company (IC) loans/seconds its employees to a foreign company (FC). IC invoices FC and receives foreign currency. It adds an agreed mark-up to the actual cost of the employee. Will this be eligible for export exemption if:

(a) loaned/seconded employees work from India?

(b) if they work at the FC site abroad, or work at any other location outside India?

[SOWMYA CA]

Sir,

If the loaned / seconded employees work on the project of foreign company, then it amounts to export of service, irrespective of whether they work in India or outside of India and eligible for export exemption. The invoice amount will be actual cost plus an agreed mark-up

[Amit Agrawal]

Quantification of billing (i.e. service charges) is not a determining factor whether services provided is 'export' or not.

Nature of services provided and 'Place of supply' being outside India u/s 13 of the IGST Act, 2017 (for services so provided) are one of determining factor whether services provided is 'export' or not.

More details are required about nature of services provided (which can be derived from roles / responsibilities mentioned in the agreement and mutual understanding thereto) as well as some factual aspects (depending upon potentially applicable situations (if any) in nature of the services specified in sub-sections (3) to (13) of said section 13) to come to any conclusion.

AI Summary

Export of services: secondment of employees qualifies as export when place of supply is outside India, irrespective of work location. Secondment of employees by an Indian company to a foreign company may qualify as an export of services if the place of supply is outside India; eligibility rests on the nature of services and place of supply rules rather than billing quantum, and an invoice of actual cost plus agreed mark up does not alter that legal character.