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ADVANCE AUTHORITY RULING : RAJASTHAN : REIMBURSEMENT OF EXPENSES BY FOREIGN HO TO BRANCH IN INDIA

Whether the reimbursement of expenses and salary paid by foreign Head Office to the liaison office established in India is liable to GST as supply of service, when no consideration for any services is charged/ paid

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AJASTHAN AUTHORITY FOR ADVANCE RULING
GOODS AND SERVICES TAX
ADVANCE RULING NO.RAJ/AAR/2018-19/05

 

Question :  1. Whether the reimbursement of expenses and salary paid by foreign Head Office to the liaison office established in India is liable to GST as supply of service, when no consideration for any services is charged/ paid .

Question : 2 Whether the applicant i.e. the Liaison Office is required to get registered under GST –

 

Reply :  The amount received from HO are the funds for payment of salary, reimbursement of expenses and no consideration is being charged by the applicant from the HO for such services – Further the liaison office is prohibited to undertake any activity of trading, commercial or industrial nature or entering into any business contracts in its own name. Also the reimbursement claimed by them from their HO is also falling out of the purview of supply of service. Therefore, if the liaison office in India does not render any consultancy or other services directly / indirectly, with or without any consideration and the liaison office does not have significant commitment powers, except those which are required for normal functioning of the office, on behalf of Head Office, then the reimbursement of expenses and salary paid by foreign Head Office to the Liaison Office, established in India, is not liable to GST and the applicant is not required to get itself registered under GST

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