06 Jul 2026
GCCs pause overseas employee deputations, to seek FinMin clarity after EY tax ruling
06 Jul 2026
06 Jul 2026
This is a link-enhanced version of an article that first appeared in Moneycontrol.
Article Overview:
The article examines the impact of the Delhi High Court’s ruling in the EY US case on global capability centres (GCCs) and multinational companies operating in India. It explores the growing uncertainty surrounding the tax treatment of overseas employee secondments, the potential classification of deputation payments as fees for technical services (FTS), and the resulting implications for tax exposure, permanent establishment (PE) risks and cross-border employment arrangements.
Our Partner, Aditi Goyal, shared her perspective. Here’s what she had to say:
“The Delhi High Court’s judgment is likely to materially increase the tax risk associated with cross-border secondment arrangements, particularly for multinational groups operating GCCs, captive centres and Indian subsidiaries that regularly host personnel from overseas group entities.”
“The finding by the Delhi High Court that seconded employees remain employees of the non-resident entity may heighten the risk of a PE being constituted in India. If a PE is constituted, the business profits of the non-resident entity attributable to the activities performed by the PE would be taxable in India on a net basis at 35% plus applicable surcharge and cess.”
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