A NRI (Employee of holding company) is on visit subsidiary company(On Business VISA) incorporated in India. And subsidiary company want to borne the expenses on hospitality (Rent of House) of NRI.(There is no provision in MOA or AOA of subsidiary company incorporated in India regarding Payment of such expense)
What are the various compliance to be followed before making such payment(Such expenses are to be booked in Indian company books and the same is not reimbursed by foreign holding company)
and what will be tax treatment of same in hands of Employee and Subsidiary Indian company
Subsidiary's Hospitality Expenses for NRI Employee Likely Unrestricted by FEMA; Compliance Review Encouraged for Tax Implications An individual inquired about the compliance and tax implications for a subsidiary company in India covering hospitality expenses, specifically house rent, for an NRI employee of its holding company visiting on a business visa. The subsidiary's Memorandum of Association (MOA) or Articles of Association (AOA) do not address such payments. A respondent suggested that since the expenses are incurred within India and involve no foreign exchange, the Foreign Exchange Management Act (FEMA) likely imposes no specific guidelines or restrictions. However, the respondent noted this as a preliminary view and invited updates if contrary information is found. (AI Summary)
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