Perdiem

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VINITHA RAJESH (Querist)
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04 November 2009 Please give your suggestions for the below cases

1.Indian company has a client abroad. The foriegn company is paying perdiem to the employees of the Indian company working on site. What will be the tax implication on perdiem to the employees

2.The indian company which is a stpi unit pays the perdiem to the employees and invoice the foreign company for this amount. How will this be treated in the books of the Indian company and what will be the tax implication on the employees. (Salary or other income). Will STPI treat the amount as income and require softex forms

chetan soni

chetan soni (Expert)
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04 November 2009 Please see

1. If the perdiem is paid by the foreign company then as employer u don't need to worry for that. The saving from this perdiem will considered as other income & chargeable to income tax as per the slab of the employee.

2. In case the perdiem is paid by your company then following steps needs to follow:
i. Keep the details of all forex given to employee
ii. Ask him for the expenses done details along with the proof of the expenses
iii. In case there is saving in perdiem then this saving will table as perquiste in his salary income & employer needs to deduct the TDS on this.

If you don't want to show this as his salary income then take the declaration from employee stating that the full perdiem given to him was spend by him.

Regarding the STPI treatement :
The amount of perdiem billed to client will be considered as export earnings. And the amount of perdiem paid to employees will be considered as foreign exchange outgo in the monthly & annual reports.

This treatment we follow in our STP units.