No GST on salary remitted by HO to liaison office in India for normal functioning liaison office: AAR

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If liaison office in India does not render any consultancy or other services directly / indirectly, with or without any consideration and liaison office does not have significant commitment powers, except those which are required for normal functioning of office, on behalf of head office,then reimbursement of expenses and salary paid by head office to liaison office, established in India, is not liable to GST and head office is not required to get itself registered under GST

• The applicant is the Indian liaison office of a company incorporated at Netherlands.

• The conditions of liaison office are that except proposed liaison work, it shall not undertake any activity of a trading, commercial or industrial nature nor shall it enter into any business contracts in its own name without RBI prior permission; no commission / fees shall be charged or any other remuneration received by liaison office for the liaison activities; entire expenses of liaison office will be met exclusively out of funds received from board through normal banking channels; liaison office will not render any consultancy or any other services directly/indirectly with or without any consideration.

The salaries of the employees are remitted by HO to liaison office that further pays the same to the employees working there. The HO also reimburses the other expenses incurred by liaison office for their operation.

Citation- [2018] 95 120 (AAR- RAJASTHAN)