Delhi HC holds secondment reimbursements taxable as Fees for Included Services (FIS) under India–USA tax treaty

The Delhi High Court (HC) ^[1]  has recently ruled in favor of the Revenue on the issue of taxability of cost reimbursements received by a foreign Taxpayer from Indian entities in respect of secondment of employees. The HC held that such receipts are taxable as Fees for Included Services (FIS) under Article 12 of the India–USA Double Taxation Avoidance Agreement (‘the treaty’) as the secondment arrangement satisfied the “make available” test.

The HC relied extensively on its earlier ruling in Centrica India Offshore Pvt. Ltd. and held that, on the facts, the secondees continued to retain an employment connection with the taxpayer, including lien/ return rights and social security-related benefits. Accordingly, the HC treated the taxpayer as providing services through such secondees and held that the secondment receipts were taxable as FIS. .

^{[1] CIT vs. EY U.S. LLP [2026] 187 taxmann.com 711 (Delhi) [18-06-2026]}