The EY tax dispute over payments for employees seconded to India will be examined by India’s Supreme Court. On October 26, 2026, the court sought a response from the income tax department to Ernst & Young US LLP’s appeals against a ruling that treated ₹24.06 crore in reimbursements as taxable fees for technical services.

EY tax dispute centers on seconded employees

A bench led by Justice PS Narsimha agreed to examine whether cost-to-cost reimbursements arising from the secondment of employees by a US company to its Indian subsidiary are taxable under India’s Income-tax Act, 1961, and the India-US Double Taxation Avoidance Agreement.

EY told the court that the Income Tax Appellate Tribunal had found the seconded personnel were employees of EY’s Indian entities. The firm said the payments reimbursed amounts EY US had paid on those entities’ behalf and had already been taxed as salary in the employees’ hands.

The firm argues that taxing the amounts again through EY US would amount to double taxation.

Why the High Court allowed taxation

In June, the Delhi High Court set aside the tribunal’s decision not to treat the ₹24.06 crore as fees for technical services. It said the tribunal had not given sufficient reasoning for departing from the assessing officer’s and dispute resolution panel’s decisions.

The High Court accepted the tax department’s position that the services fell under Article 12(4)(b) of the India-US treaty. It also held that they satisfied the treaty’s “make available” test. The Supreme Court has sought the department’s response; it has not yet decided the appeals.

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