In a second major ruling on seconded employees in recent times, the Karnataka High Court has set aside an order of the Income-Tax Department that called upon Flipkart Internet to withhold tax on the payments it made to Walmart as remuneration to the staff it hired from the US major.
Seconded employees refer to those sent on deputation for a stipulated period for the mutual benefit of the companies concerned.
The case relates to an inter-company master services agreement signed by Flipkart and Walmart for secondment of employees. These employees were working in India in the period relevant to assessment year 2020-21. Flipkart paid Walmart to reimburse these employees. Walmart in turn paid the employees their salaries for administrative convenience.