Hi all,
Our parent Company (registered in US) is in the process of recruiting foreign nationals as Trainees for a specific period of say 3 - 6 months. They will be sent to India for training by a Company which has business relationship with them. The foreign company proposes to provide Guest House facilities and also a fixed sum every month as stipend. The stipend in Indian Currency is to meet their expenses.
The Guest House will be maintained for Training purposes by the Indian Company.
My question is : 1. Is the Indian Company permitted to pay to the Foreign nationals the stipend and also the Guest House maintenance charges to be debited to the Foreign Company and recovered as Service rendered.
2. What are the tax implications?
Regards,
Paddutr
From India, Gurgaon
Our parent Company (registered in US) is in the process of recruiting foreign nationals as Trainees for a specific period of say 3 - 6 months. They will be sent to India for training by a Company which has business relationship with them. The foreign company proposes to provide Guest House facilities and also a fixed sum every month as stipend. The stipend in Indian Currency is to meet their expenses.
The Guest House will be maintained for Training purposes by the Indian Company.
My question is : 1. Is the Indian Company permitted to pay to the Foreign nationals the stipend and also the Guest House maintenance charges to be debited to the Foreign Company and recovered as Service rendered.
2. What are the tax implications?
Regards,
Paddutr
From India, Gurgaon
Dear paddutr, Yes, it can. As per the Tax implications Income Tax Act will be applicable. Regards, SC
From India, Thane
45From India, Thane
Hi Paddutr,
Related to your first question Tax will be applicable to stipend provided it is more than Rs. 1 Lac / person. If it is not above 1 lac then no tax shall be paid. Since we have to folow the same formula that we follow for deducting TDS for all employees in Indian company.
Secondly, guest house services is services which ur rendering to the foreign company & it will be regarded as Export services since u will be selling services on behalf of the guest house owner. So there will be no tax since Export services are exempted from tax.
This is as per my understanding. Incase of further queries pls feel free to ask.
Regards,
Pooja
From India, Pune
Related to your first question Tax will be applicable to stipend provided it is more than Rs. 1 Lac / person. If it is not above 1 lac then no tax shall be paid. Since we have to folow the same formula that we follow for deducting TDS for all employees in Indian company.
Secondly, guest house services is services which ur rendering to the foreign company & it will be regarded as Export services since u will be selling services on behalf of the guest house owner. So there will be no tax since Export services are exempted from tax.
This is as per my understanding. Incase of further queries pls feel free to ask.
Regards,
Pooja
From India, Pune
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HC All - Trainees not covered for PF -2010.pdf