GST & Indirect TaxUpdated 5 October 2026

GST on Secondment of Employees Between Group Companies: Payroll, Control and Valuation File

By Ravi Sisodia · Reviewed by CA Divyanshu Sengar · Updated 5 October 2026

2-minute summary

Review who controls day-to-day work, bears employment obligations, can terminate, evaluates performance and carries economic risk.
A payroll recharge alone does not settle the employer question; the secondment agreement and actual conduct are critical.
If the arrangement is treated as import of service from a related foreign affiliate, Rule 28 and Circular 210 address valuation where the Indian recipient has full ITC.
Do not rely on a single historic service-tax precedent without mapping the current GST statute, circulars and the specific secondment facts.

Current position

GST on employee secondment is fact-sensitive. The core question is who is the real employer during the secondment and whether the foreign/group entity is supplying manpower or another service to the Indian entity. Schedule III protects services by an employee to the employer in the course of employment, while related-party import rules and Circular 210 matter if a foreign affiliate is supplying services.

Control and evidence map

#	Control	What the file should show
1	Collect employment/secondment agreements, payroll trail and social-security/tax documents.
2	Map supervision, leave, appraisal, termination and disciplinary rights.
3	Identify whether the overseas entity adds any markup or service fee beyond payroll cost.
4	If related-party import exists, document RCM and Rule 28/Circular 210 valuation position.
5	Reconcile employee cost, intercompany recharge, GST self-invoice/RCM where applicable and ITC eligibility.

Worked example

A foreign parent sends a specialist to its Indian subsidiary for two years. The Indian subsidiary directs daily work and bears salary cost, while the parent continues the legal employment contract and recovers payroll plus a service fee. The file should not assume the entire recharge is either automatically payroll or automatically manpower service. It must separate employment facts, any foreign-affiliate service and the valuation/RCM consequence.

Common mistakes

Using the word “secondment” as the tax conclusion.
Looking only at who pays salary.
Ignoring a separate markup/service fee.
Claiming nil value under Circular 210 without checking full-ITC eligibility and related-party service facts.

Frequently asked questions

Are all seconded employees outside GST?

No. Schedule III applies to employee-to-employer services; the real employer and any separate group-company supply must be determined.

Does a payroll recharge create tax by itself?

Not necessarily; it is one fact among several.

Why is Circular 210 relevant?

It addresses valuation of related foreign-affiliate services where the Indian recipient has full ITC.

What documents matter most?

Secondment/employment contracts, control rights, payroll/social-security trail and intercompany invoices.

Official sources

Central Board of Indirect Taxes and Customs - Central Goods and Services Tax Act, 2017 (current consolidated law)
CBIC / GST Council - Circular 210/4/2024-GST - import of services from related persons; full ITC valuation (2024-06-26)
Central Board of Indirect Taxes and Customs - CGST Valuation Rules (current rules)

Disclaimer: Educational and informational content only. Apply the current law, instrument, contract and facts before acting; obtain professional advice for material or disputed matters.

Disclaimer

Educational and professional reference only; confirm the current law, rates and the facts of your case before relying on this page.