Double payment of salary to indian employees

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

23 May 2018 Parent company in Germany had made payment of salaries of Indian employees of Indian subsidiary by mistake.Also Indian subsidiary has rightly paid the salaries.
1. What are the consequences/ violations in this case and remedy available ?.

2. can this be adjusted against next month salary of employees and indian subsidiary can reimburse the same to parent co.

3. will there be any fema violation ?

4. will it attract gst under rcm basis under manpower supply services to be borne by indian subsidiary, as dept has issued SCN in past based on similar transactions.

pl guide.

CA Suresh Jain

CA Suresh Jain (Expert)
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23 May 2018 * can this be adjusted against next month salary of employees--- yes
* Indian subsidiary can reimburse the same to parent co. - This can be answered after knowing the mode and route of payment made by the Parent Company - normally the answer is yes as a refund of advance received
* will there be any fema violation ? -- No, if the payment was made by parent company through banking Channels the
* will it attract gst under rcm basis under manpower supply services to be borne by Indian subsidiary, as dept has issued SCN in past based on similar transactions -- the answer can be provided only after going through the SCN

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Querist : Anonymous

Querist : Anonymous (Querist)

24 May 2018 Thanks Mr. Jain
1.Also, TDS is not deducted in this case on employee salaries. what is the remedy, should we deduct in next month ?
2 These Indian employees were consultants to German parent co. from oct 17 to mar 18 and their employment agreements started with indian subsidiary from 1st apr 2018.
3.Do we need to inform AD/ RBI about the transaction volunarily. and take their approval ?

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CA Suresh Jain

CA Suresh Jain (Expert)
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24 May 2018 1.Also, TDS is not deducted in this case on employee salaries. what is the remedy, should we deduct in next month ?--- yes TDS should be deducted now
2 These Indian employees were consultants to German parent co. from oct 17 to mar 18 and their employment agreements started with indian subsidiary from 1st apr 2018.3.Do we need to inform AD/ RBI about the transaction volunarily. and take their approval ?---- for employing a person in India and making payment in Indian currency does not require any permission from RBI