India: Reimbursements of seconded employees’ salaries not taxable in India under U.S. treaty (High Court decision)

Seconded employees were employees of Indian company

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February 19, 2025

The Division Bench of the Karnataka High Court held that payments made by an Indian company to reimburse a related U.S. company for salaries paid to employees of the U.S company seconded to the Indian company were not payments for services taxable in India under the India-U.S. income tax treaty.

The court found that under the terms of the secondment agreement, the seconded employees were employees of the Indian company, and thus the U.S. company was not providing any services to the Indian company or otherwise making any technical knowledge available to the Indian company, which could be taxable in India under the treaty.

Read a February 2025 report prepared by the KPMG member firm in India 

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