Key Points
- UPAAR ruled that providing manpower to foreign clients without a permanent office attracts GST.
- Pacific Staffing Solutions asked for a ruling on providing HR services to foreign clients.
- These services include temporary workers and full-time placements in India.
- Since the services happen in India, they can’t be considered exports and are taxable.
- AAR rulings apply only to the applicant and local tax officials, but they might influence future policies.
Looma News
The Uttar Pradesh Authority for Advance Ruling (UPAAR) has made it clear that supplying manpower to foreign clients without a permanent office in India will attract Goods and Services Tax (GST). This ruling impacts companies like Pacific Staffing Solutions, which is looking to provide HR services.
Pacific Staffing Solutions plans to sign agreements with various foreign clients to supply manpower services, such as temporary labor and full-time employee placements, within India. These clients do not have offices in India and need services performed in the country.
UPAAR noted that the applicant would handle the entire payroll process for temporary workers, charging a fixed fee based on the monthly payroll. For full-time placements, a one-time fee will be charged. The services include professional recruitment, manpower management, BPO services, and corporate training, customized to meet clients’ needs.
UPAAR concluded that because the services are delivered in India, they cannot be labeled as exports and are therefore subject to GST. The authority emphasized that the place of supply for the services is where they are actually performed, confirming that services provided by selected candidates take place within India.
While AAR rulings are only binding for the applicant and local tax authorities, they can be used as a reference for similar cases and might lead to changes in policies down the line.
