ABSTRACT
Employee secondment plays a crucial role in facilitating workforce mobility among multinational corporations (MNCs) seeking operational integration across global subsidiaries. However, the taxation of secondment agreements in India has evolved into a complex legal issue following the introduction of Goods and Services Tax (GST) in 2017. The landmark Northern Operating Systems Pvt Ltd case (2021) reinforced tax liability on secondment, concluding that salary reimbursements qualify as taxable manpower supply services, leading to increased compliance burdens for businesses.
This dissertation provides a comprehensive analysis of secondment taxation, examining judicial interpretations, industry adaptations, comparative international tax frameworks, and corporate tax compliance strategies. The study evaluates India’s evolving legal stance, contrasting it with best practices in the UK, Singapore, and Australia, where structured payroll-based taxation models offer clearer secondment classifications. Additionally, the research assesses corporate restructuring models, including direct employment transfers, independent contractual engagements, and AIdriven compliance solutions, designed to optimize secondment tax efficiency.
Through a qualitative legal research methodology, integrating statutory interpretation, judicial precedents, and multinational policy assessments, this dissertation confirms the significant impact of GST on secondment agreements and explores the long-term implications of regulatory adjustments. Hypothesis testing reveals that India’s judicial approach toward secondment taxation leans toward manpower supply classification, contrasting with global tax exemption mechanisms. The study further proposes policy recommendations, advocating advance ruling mechanisms, statutory employer classifications, and AI-powered tax audit frameworks, ensuring greater compliance transparency for MNCs operating in India.
By identifying key industry challenges and legislative ambiguities, this research contributes to the ongoing policy discourse on secondment taxation, highlighting the need for structured tax governance models that align India with global best practices. The findings hold significant implications for corporate legal teams, tax policymakers, and multinational firms navigating GST compliance on employee secondment agreements.