Quick answer: A secondment is a temporary assignment in which an employee works for another company in the group, usually abroad, while keeping a link to the original employer. Seconding staff to India raises three questions. Indian income tax on the salary. International Worker PF on full pay. And whether the parent now has a permanent establishment.
- Foreign secondees on Indian payroll contribute 12% PF on full salary as International Workers, unless they hold a Certificate of Coverage.
- India has 20 operational social security agreements, plus the UK from 15 July 2026.
- The Supreme Court treated an overseas group company’s secondment as manpower supply for service tax in 2022.
- Salary for work done in India is taxable in India, whoever pays it.
How does a secondment to India work?
The employee keeps their home contract and is placed with the Indian company for a set period. The Indian entity directs the day-to-day work.
Payroll usually runs in one of two ways. Either the home company keeps paying and recharges the Indian entity, or the Indian entity puts the secondee on local payroll. Even when pay stays abroad, Indian salary TDS still has to be handled, which is where a shadow payroll comes in.
Residence decides the reach of Indian tax. A secondee who spends 182 days or more in India in a tax year becomes resident under section 6. See the tax residency rules for the other limbs.
What are the tax and PF risks of a secondment?
Four, and each one has its own test.
| Risk | What triggers it | How to reduce it |
|---|---|---|
| Service PE for the parent | Secondee keeps a lien with the parent and stays on its payroll | Shift control, cost and reporting to the Indian entity |
| GST on the recharge | Recharge treated as manpower supply, taxed in India under reverse charge | Review how salary is recharged before the first invoice |
| International Worker PF | Foreign national on Indian payroll | Obtain a Certificate of Coverage where an agreement applies |
| Salary TDS | Work performed in India | Run monthly TDS on all India-taxable pay |
The PE line comes from DIT v Morgan Stanley in 2007, where the Supreme Court held that a deputationist with a lien on the parent’s employment can create a service PE. Read more on permanent establishment risk.
The GST line traces to CCE v Northern Operating Systems. On 19 May 2022 the Supreme Court held the Indian company was the recipient of manpower supply from its overseas group entity. It was a service tax case, but the same reasoning shapes GST reviews of secondment recharges.
For PF, the UK is the newest partner. A UK secondee with a valid certificate can stay on UK contributions for up to five years. Check the Certificate of Coverage process and International Worker rules before day one. Courts are split. The Supreme Court is examining them.
When is local hiring better than a secondment?
When the role is long and the person could be hired in India. A local hire avoids the lien that drives PE risk and the recharge that drives GST.
Short secondments for knowledge transfer still make sense. Longer ones rarely do. Our pieces on how an EOR helps with expat employees and global talent mobility cover both routes.
How does Remunance support secondees and expats in India?
Remunance can put a foreign national on its own Indian payroll, register them as an International Worker and run monthly TDS under our registrations. Data handling is ISO/IEC 27001:2022 certified. The Indian employment then sits on our entity, not with your parent company. Before you sign a secondment letter, run your India assignment plan past us.
What else do people ask about secondments?
What does secondment mean in HR?
It means temporarily moving an employee to another part of the group, often in another country, while their original employment continues in the background.
Is a secondee’s salary taxable in India?
Yes, for work done in India, even if the home company pays it. A treaty short-stay exemption may apply to short visits, subject to conditions.
Do secondees to India have to pay PF?
Usually, if they are foreign nationals on Indian payroll. A Certificate of Coverage from an agreement country, such as the UK or Germany, removes the requirement.