Allocation of Corporate Product Manager cost 2 its Indian subsidiary,Will it be an import of service

[Sanjeev Sharma]

A foreign parent company allocates the cost of its Corporate Product Manager ( who looks after the particular businesss of all the companies in the group) to its all subsidiaries (including indian subsidiary Co.) around the world. For Indian subsidiary, will it be an import of service ? If yes, under which category ??

[Surender Gupta]

Why it allocates the cost of its corporate manager to its all subsidiaries? Is it not mean that parent company is providing some services to the subsidiary through its corporate product manager? The allocation may be on cost to cost basis but the main question is, what is the nature? It may taxable as Import of service in the hands of Indian subsidiary companies. You may argue that parent company is not provided any service to its subsidiary companies, in that case, you need to describe the nature more.

[Guest]

It appears that the work of the Corporate Product Manager is to develop the market for the product or of the design of the product; in the former case, the service would fall under business auxiliary services as any service relating to the promotion or marketing of the service provided by the client; in the latter case, this may fall under the management consultant's service; further, unless there is import of service there would not be distribution of the costs to the entities that are separate legally.

AI Summary

Import of service: allocation of corporate product manager costs may trigger tax as business auxiliary or management consultancy. Whether a foreign parent's allocation of Corporate Product Manager costs to an Indian subsidiary is an import of service turns on whether the parent provides identifiable services to the subsidiary. Promotion or market development activities suggest business auxiliary services, while product design or advisory work suggests management consultancy. Mere cost allocation without substantive services requires detailed factual description to avoid import characterization.