Secondment agreements and reimbursement — do I need an adviser, or can I do it alone?
Some of it, yes — and we will say so on the call if that is the honest answer. The parts that are worth paying for are the ones where a missed election, a missed deadline or an unverified threshold costs more than the fee: the analysis asks who is the real employer, who controls the work, and whether the payment is a reimbursement of salary or consideration for services.
What if I have already filed and got it wrong?
That is a common starting point. We re-derive the position, identify whether an amendment or a disclosure route is the right vehicle, and tell you which one preserves the relief that is still available. The order matters more than the speed.
How long will it take?
It depends on the documents rather than on us. Once the pack is complete most filings turn around inside a fortnight; anything that needs a certificate from a tax authority runs on that authority's timetable, which we tell you at the start rather than at the end.
Is a salary reimbursement to our foreign parent taxable in India?
That is the question the arrangement usually turns on. A genuine reimbursement of salary cost, where the foreign entity passes through what it paid on your behalf, is a different thing from a payment for services rendered by that entity through its people. The analysis looks past the label on the invoice to the substance: who directs the work, who can discipline or recall the individual, whose business risk the work serves, and what the contracts and payroll records actually show. Where the substance points to services, the payment is treated accordingly, with consequences both for withholding and for the foreign entity's own exposure in India.
Who is the employer when staff are seconded to an Indian subsidiary?
In law both entities may have a claim to the role, which is why the arrangement is argued so often. The tests that matter are practical rather than formal: who sets the tasks and supervises them, who bears the cost economically, who holds the right to end the assignment, whose appraisal process the individual sits in, and what the employment and secondment documents say on each of those points. A contract naming one employer while every operational fact points to the other will not hold. The useful work is done before the assignment starts, aligning the paperwork with what is actually going to happen.
Can seconded employees create a permanent establishment in India?
It is a real risk and it is assessed on the facts, not on the length of the stay alone. Where seconded staff are in substance working for the foreign employer's business in India, performing its contracts, serving its customers and taking direction from it, the argument that the foreign entity has a taxable presence becomes hard to resist. Where they are genuinely integrated into the Indian entity and working on its business under its direction, the position is more comfortable. The distinction is evidenced by day-to-day records: reporting lines, appraisals, and whose work the output serves.
Do we deduct Indian tax on salary paid by the home payroll?
The general principle is that remuneration for duties performed in India falls within the Indian charge wherever it is paid and in whatever currency, which is why split payroll arrangements do not solve the problem by themselves. The Indian entity generally has to account for tax on the whole of the remuneration relating to Indian duties, including the part that never touches an Indian payroll. Doing this properly requires the home-country payroll data month by month rather than once a year, and a reconciliation at the year end. Getting it wrong tends to surface later, with interest running on it.
What should a secondment agreement actually say?
It should say what is going to happen, and it should be consistent with every other document in the file. The points that get tested are control and supervision, the right to end or recall the assignment, who bears the economic cost and whether it is genuinely passed through without addition, whose instructions the individual follows, and what becomes of the home employment during the assignment. What causes trouble is boilerplate, drafted to look tidy rather than to describe the arrangement, because the agreement is read against emails, appraisals and payroll records. Where those diverge, the paperwork is the weaker evidence.
The department says our reimbursement was a service fee — what now?
Do not answer it from the invoice. The response has to be built from the underlying facts: the secondment agreement, the reporting lines actually used, the appraisal and payroll records, and evidence that what was charged was the cost and nothing beyond it. Establish first whether the position is defensible, because that decides everything after it. If it is, the reply is an evidenced account of who the real employer was and why. If it is not, the question becomes exposure: which years are affected, what the withholding consequence is, and whether correcting it on your own initiative is better than waiting.
What is a permanent establishment, and how easily do we create one?
A taxable presence in another country under the treaty — typically a fixed place of business such as an office, branch, factory or workshop, or a dependent agent habitually concluding contracts on your behalf. Some treaties add a services test measured in days. Purely preparatory or auxiliary activity is excluded, but that carve-out is narrower than it sounds: one senior employee working from home in the other country, with authority, has been enough. See business profits and permanent establishment.
When does a construction project create a permanent establishment?
Most treaties give building sites and installation projects their own rule, turning on how long the work continues rather than on whether an office exists. Time is generally counted per site, and related contracts split between group companies are commonly aggregated to stop the threshold being avoided by paperwork. The period differs between treaties, so it is read from the one that applies. See permanent establishment risk.
