Tax in India on salary to employee sent abroad for rendering services to a foreign company

The Applicant is obliged to withhold taxes on such salary paid in India, it is seen that the provisions of section 192 (1) are very clear. Tax is required to be deducted by the employer from the income payable which is chargeable to tax under the head salaries. This Authority had occasion to examine this issue in the case of British Gas India (P.) Ltd. (supra), wherein on similar facts this Authority had ruled that salary paid for rendering services in the UK were not taxable in India and that no tax need be deducted therefrom, provided the tax on that income was paid in the UK. The Applicant’s reliance on the cases of Eli Lily and Co. (India) (P.) Ltd. (supra) and Coromondal Fertilizers Ltd. support this view that unless there was an obligation on the employee to pay tax on income from salaries, there would not be any liability to deduct tax under section 192 by the employer.

9.6 To conclude, we are in agreement with the view that the split pay and perquisites received in India by Mr T N Santosh Kumar but accrued outside India, would not be taxable in India, and consequently, the employer, Texas Instruments (India) Pvt. Ltd., i.e. the Applicant would not be obliged to withhold tax on the same at the time of payment under section 192 of the Act.

AUTHORITY FOR ADVANCE RULINGS, NEW DELHI

Texas Instruments (India) (P.) Ltd., In re