A foreign company cannot shrug off its tax liabilities on benefits provided to employees in its liaison office in India on pretext that its income does not arise from the country, clarified a recent ruling by Authority for Advance Ruling.
"There is no doubt that a foreign entity not earning any income in India but having employees in this country is liable to Fringe Benefit Tax, if it pays fringe benefits to those employees," AAR said giving ruling in case of Singapore-based Singapore Tourism Board.
The ruling also pointed out that FBT would apply to liaison offices of foreign companies in India if the liaison offices had employees based in India.
The Singapore-based tourism company had sought the authority's ruling whether it was liable to pay FBT on the benefits provided to the company's employees in the liaison offices in