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Question ID : 41130

Gratuitous payment by Holding Co to Subsidiary employees

Dear All, Facts : Holding Co is based in UK Subsidiary is based in India. Due to Covid-19 holding co has resolved to pay certain amount to all employees all subsidiary and associates. No benefit / margin will be retained by subsidiary. E.g. 200 pounds recd by subsidiary & amount worth 200 pounds will be fully paid to employees of the subsidiary. Modus of payment: Subsidiary in India will pay the amount to its employees in India and this will be reimbursed by holding co along with all the employee related taxes borne by subsidiary, if any. Query: What shall be the tax treatment of amount received from holding co in the hands of subsidiary co.? If taxable - what is the service ? Who is the service provider? who is the recipient ? On what Value GST should be paid ? whether GST to be paid under RCM ? Thanking you in advance for your guidance.

Posted by CA MITUL MAHENDRA MEHTA on Aug 31, 2021

Filed Under GST