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Interest on delayed payments to figure in GST Council meet

Interest on delayed payments to figure in GST Council meet

Businesses facing the prospect of having to pay around Rs46,000 crore as interest on delayed payment of goods and services tax (GST) may get a reprieve, with the government considering calculating the interest only on their net tax liability, and with retrospective effect . The finance ministry hasn’t yet calculated the savings that would accrue to assessees as a result.

“The issue is expected to be raised at the next GST Council meeting on March 14, which will take a final call on this matter,” one of two officials who briefed HT about the plan said on condition of anonymity. The federal council, which has representation from states, is the apex decision-making body on GST matters, and is chaired by the Union finance minister.

The current position of the Central Board of Indirect Taxes and Customs (CBIC) is a rigid one—that interest will be calculated on gross GST. And so, it has calculated the dues on the basis of gross GST liabilities of assesses.

Meanwhile, citing a GST Council decision , taxpayers have challenged the methodology in various tribunals, saying interest should be calculated on the basis of net tax liability after factoring in assesses’ input tax credit (ITC).

Gross GST is the total tax liability of the assesses on the sale of goods and services without any input tax credit being deducted. ITC is available to all assesses on taxes paid on all procurements. Net GST liability is the difference between gross GST and ITC).

Experts said the issue rattled taxpayers on February 10, when CBIC issued an internal memo directing field offices to collect ₹46,000 crore from GST assessees.

The CBIC action was not in tune with the GST Council’s decision on December 22, 2018 at its 31st meeting. The Council decided to amend Section 50 of the Central GST Act to provide that interest be charged only on the net tax liability of the taxpayer, after taking into account the admissible input tax credit. The amendment was passed by Parliament in July 2019 along with the Budget [the Finance (No.2) Act, 2019] and received a presidential nod on August 1.

According to CBIC, as the amended Act has not yet been notified, the old position on calculation of interest is the legal position, hence assesses should pay interest on the gross amount of tax. “The GST laws, as of now, permit interest calculation on delayed GST payment on the basis of gross tax liability. This position has been upheld in the Telangana high court’s decision dated 18.04.2019,” CBIC said in a series of tweets on February 15.

The finance ministry did not respond to e-mails seeking comment.

CBIC also clarified that the interest will be calculated on the basis of net tax liability prospectively only after the government notifies the December 22, 2018 decision of the GST Council. “In spite of this position of law and the Telangana high court’s order, the central government and several state governments, on the recommendations of GST Council, amended their respective CGST/SGST (central GST/state GST) Acts to charge interest on delayed GST payment on the basis of net tax liability. Such amendments will be made prospectively,” CBIC tweeted.

Source: Hindustan-Times.

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E-commerce cos may get to upload GST e-invoice for vendors

E-commerce cos may get to upload GST e-invoice for vendors

 In a significant relaxation for the ecommerce sector, the government could allow online platforms such as Amazon and Flipkart to upload e-invoice for vendors under the goods and services tax (GST) framework. As part of ongoing trials of e-invoicing, a detailed set of clarifications in the form of frequently asked questions have been issued. “Ecommerce operator can request for e-invoice on behalf of supplier,” the clarification said. The matter has been taken up by the government and could be allowed once the trial period is over, a government official told ET. “Trials are now on…It will require an amendment… The issue has been taken up.” The GST Network has issued a detailed set of FAQs.

“Allowing ecommerce platforms to undertake e-invoice compliance on behalf of suppliers would go a long way in facilitating compliance for such suppliers,” said Prashanth Agarwal, partner. Given the criticality, it’s important for businesses to keep track of them. Further, businesses should participate in the testing phase as part of their preparation to go live on April 1, Agarwal said.

Voluntary uploading of e-invoices on the GSTN portal kicked off from January 1, for businesses having turnover over Rs 500 crore. For businesses having annual turnover over Rs 100 crore will be effective from February 1. Only 10,000 line items per einvoice would be allowed, as per the FAQ. Foreign services providers will have to set up local entities to integrate with the invoice registration portal (IRP), as per the FAQs.

Experts say these clarifications will help businesses gear up for the new system.”With specifications for e-invoice API being released to various companies, the government’s intent to soon implement it is reinforced,” said Abhishek Jain, tax partner, EY. “FAQs released provide clarification on ambiguities such as no requirement of invoice registration portal validation for delivery challans and bill of supply, 10,000 line items being allowed per e-invoice, amendments in the GST law on invoicing to align with e-invoices, etc and its timely release should help businesses gear up better for this new system.” The e-invoice system of uploading invoices on government portal will be mandatorily rolled out for businesses with turnover over Rs 100 crore from April 1.

Also, for B2C invoicing issued by businesses with annual turnover over Rs 500 crore, an electronically scannable quick response (QR) code will be mandatory from April 1. The e-invoice will help streamline the indirect tax system and ensure better compliance by keeping a check on tax evasion.

Source: Economic-Times

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GST Council votes for a change, shifts lotteries to highest slab

GST Council votes for a change, shifts lotteries to highest slab

The Goods and Services Tax (GST) Council on Wednesday departed from its practice of consensus-based decision-making, opting the first time for a vote to settle differences among states over the taxation of lotteries.

The council also deliberated upon a presentation made by a committee of officers set up to study revenue augmentation, but refrained from any generalised rate increase or removal of exemptions.

“The council has decided to impose a single rate of 28% on state-run and authorised lottery,” union finance minister Nirmala Sitharaman said after the 38th meeting of the GST Council.

It decided to put the matter to vote following wide divergence over whether there should be a single rate or dual rates.

“Every attempt was made to keep the set tradition alive … Every attempt was made to convince … But, eventually the council was reminded that the rules allow (for voting) and that tradition is not part of the rule book,” Sitharaman said. “I took the sense of the house … and we went ahead with the decision to have a vote. So, it is not enforced by the council, or by me as the chair.”

All decisions in the previous 37 meetings of the GST Council, headed by the union finance minister with state ministers as its members, had been taken unanimously.

Some Steps Against Tax Evasion
These included crucial ones on the finalisation of the GST law as well as the rates for goods and services.

On Wednesday, 21 states voted in favour of the single rate of 28% on lotteries, while seven voted against, an official said. The GST Act had prescribed two rates — 12%, if the lotteries are sold within the same state, and 28%, if a state sells its lottery tickets outside its jurisdiction.

Tax experts said hopefully the council wouldn’t have to resort to voting frequently and Wednesday’s remained an exception.

“For the success of GST, it’s important that the Centre and states work together and take decisions with consensus as they have been doing till now,” said Pratik Jain, leader of indirect taxes at PwC.

REVENUE IN FOCUS
The council gave “necessary guidance” to officers for analysing the impact of tax exemptions and concessions, the tax base and compliance measures needed to keep pace with revenue needs, a government statement said.

The officers’ committee, which made a presentation of GST data before the council, didn’t make any direct or indirect suggestions on tax rates. The minister said it would further analyse the data and come up with a report with its recommendations, which would be taken up at the next council meeting.

Maximising GST revenue has been one of the focus areas for the government. Collections remained below Rs 1 lakh crore for three continuous months, before it crossed the mark in November.

The council, meanwhile, took certain steps against tax evasion. It slashed the input tax credit to 10% from 20% of eligible credit if invoices or debit notes were not reflected in filings. To check fake invoice, it allowed officers to take suitable action to block credits that they believed were fraudulently claimed.

COMPENSATION FOR STATES
States raised the issue of a delay in the release of compensation that they were promised against any revenue loss from the implementation of GST. Some of them were apprehensive about the availability of funds to be distributed in the future.

“The Centre will not have appropriate funds to compensate states after February,” West Bengal finance minister Amit Mitra said. He said the government withheld payment to states despite having Rs 42,000 crore in its kitty.

Asked about the issue, Sitharaman said that during the discussions everyone recognised that an instalment of the compensation was released a few days ago.

The Centre had on Monday released Rs 35,298 crore as compensation to states. “There’s no gap (in communication) within the council. In the council and in the Rajya Sabha, I have explained in detail how we remain committed to cooperative federalism and to honour the promises given on GST,” she said.

CHANGES IN A FEW RATES
Sitharaman said the council decided to tax woven and non-woven bags at 18%, compared with 12% at present.

It exempted from tax the upfront amount payable for long-term lease of industrial and financial infrastructure plots by any entity that is owned 20% or more by the Centre or state governments.

On lotteries, the new unified rate of 28% will be applicable from March 1, 2020, revenue secretary Ajay Bhushan Pandey said.

The tax is levied on the face value of the lottery tickets, inclusive of the prize money to be distributed to the winners, margin of agents, retailers and distributors.

State governments and the lottery industry had represented to the council on the issue and it had set up a group of ministers to examine it. The council, which had considered the issue in its July meeting, then referred it to the attorney general for his view. But, divergences continued among states, prompting the decision by vote.

Source: Economic-Times

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No GST on CXO salaries: Government set to clarify

No GST on CXO salaries: Government set to clarify

The government is looking to clarify that goods and services tax (GST) should not be applicable on salaries of chief executives sitting in head offices, two people in the know said.

This comes after the tax department started raising queries on how companies have dealt with this issue. ET had first written on November 14 that some of the top companies headquartered in Pune, Mumbai and New Delhi have started receiving queries from the tax department on cross-charging of CEO and CFO salaries.

According to a person close to the development the Central Board of Excise and Customs (CBEC), is set to clarify that common function like Human Resources should be out of the GST gamut.

“The intention of the GST law was never to tax salary and any other interpretation should be avoided as this would lead to prolonged litigation. Salary cannot be under the GST net and there is an urgent need for a clarification around this,” said Rohit Jain, partner, ELP, a law firm.

The tax department has started questioning top companies and banks if they were passing on some of the common costs like salaries of chief executives to their branch offices.

The department wants companies to proportionately distribute common costs from head office to branch offices and treat this as a supply. Once this is treated as a supply, 10% of it has to be added to the cost and 18% GST could be levied on the total amount.

Industry trackers say that ideally this would be a revenue neutral transaction but still impact the cash flows of the company.

Source: Economic-Times

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Source: Business-Standard.
Non-filers of GST returns may face cancellation of registration

Non-filers of GST returns may face cancellation of registration

The Goods & Services Tax (GST) Administration plans to act tough with non-filers of returns and cancel their registration. It has also decided to update the progress made in this regard on a daily basis.

Filing of returns helps tax authorities to estimate the tax liability and find out how much tax has been paid. The problem here is that nearly 20 per cent of assessees do not file their returns, which affects GST collections.

The Central Board of Indirect Taxes & Customs (CBIC) held a meeting with the Principal Chief Commissioner and Commissioner of GST & Customs on November 13. According to sources, PK Dash, Chairman, CBIC, expressed his displeasure in the progress of cancellation of registration of non-filers who have not filed GSTR 3B (showing tax payments) returns for six or more than six return periods and are liable to action under GST law.

“…the task of cancellation of registration of such non-filers of GST returns should be taken on priority basis and should be furnished by November 25, ” a communication sent from the office of the Principal Chief Commissioner of GST & Central Excise, Mumbai to Principal Commissioner/Commissioner posted in its jurisdiction. It has also asked for reports to be sent on a daily basis.

Conditions for cancellation
Section 29 of the Central Goods & Services Tax (CGST) Act prescribes conditions for cancellation of registration and fulfilment of any of these will invite action. These include contravention of the provisions of the Act, a composition scheme assessee not filing returns for three consecutive tax periods, any non-composition assessee not furnished returns for a continuous period of six months, not commencing business within six month from the voluntary registration, and registration obtained by means of fraud, wilful misstatement or suppression of facts. The Act clearly provides that registration will not be cancelled without giving the person an opportunity of being heard.

According to GST Law, a registered person will have to file returns either monthly (normal supplier) or on a quarterly basis (supplier opting for composition scheme). An ISD (Input Service Distributor) will have to file monthly returns showing details of credit distributed during the particular month. A person required to deduct tax (TDS or Tax Deducted at Source) and persons required to collect tax (TCS or Tax Collected at Source) will also have to file monthly returns showing the amount deducted/collected and other specified details. A non-resident taxable person will also have to file returns for the period of activity undertaken.

The law is very clear here that the cancellation of registration will not affect the liability of the person to pay the tax and other dues. Every registered person whose registration is cancelled will pay an amount, by way of debit in the electronic credit ledger or electronic cash ledger, equivalent to the credit of input tax in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock or capital goods or plant and machinery on the day immediately preceding the date of such cancellation or the output tax payable on such goods, whichever is higher.

Source: The-Hindu-Business-Line

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Government expects Rs 40,000 crore GST shortfall

Government expects Rs 40,000 crore GST shortfall

The government is expecting a shortfall of around Rs 40,000 crore in the GST collections over what has been budgeted for 2019-20. This could put pressure on the compensation that states are eligible for in case the tax growth falls below 14% during the year.

A state finance minister said the Centre had informed the GST Council, which met in Goa on Friday, about the expected shortfall at a time when economic growth has slowed down. Most states were, however, optimistic that the government will find a way to meet the compensation requirements, otherwise they may be forced to borrow from the market.

Economic growth has slowed in the country due to a string of factors and latest data showed that GDP growth slumped to a six-year low of 5% in the April-June quarter, hurting prospects for higher revenues.

As part of the GST bargain, the Centre had agreed to compensate states for five years, if the annual increase in revenues was less than 14%. Under the GST law, payment of compensation only flows from a fund where the cess is collected. The Centre has estimated a collection of Rs 1 lakh crore cess on sin and luxury goods in 2019-20 or about Rs 8,000 crore a month. The collection in August was Rs 7,272 crore, triggering possibility of a lower than budgeted collection.

In the first four months of the year, the Centre has released Rs 45,784 crore as compensation to states. The states are also demanding that the compensation period be extended by another three years. The government has said it expects revenues to rebound when growth picks up in the coming quarters and is also hopeful of robust GST collection.

It is taking measures to plug loopholes and stamp out fraud claims.

The GST Council, which met after the historic cut in corporate tax rates, complimented the finance minister Nirmala Sitharaman on the bold move but state FMs are learnt to have expressed their concern over decline in their share.

Source: Times-Of-India

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GST shortfall may turn into next worry for the Centre

GST shortfall may turn into next worry for the Centre

The sluggish growth in goods and services tax (GST) revenue receipts, unless reversed quickly, could poke a ₹40,000 crore hole in central government finances by the end of this fiscal, analysts warned on Wednesday, even as a private survey showed India’s services sector growth lost steam in August from a month ago.

An analysis of GST revenue trend Credit Suisse shared on Wednesday said growth in collections in the first five months of the fiscal has been 6.4%, well below the 10% estimated for the year. If this pace is maintained for the full year, the shortfall could be ₹40,000 crore, all of which may be borne by the central government, considering that states have been guaranteed 14% annual revenue growth under GST laws, the analysis said. The Centre compensates states for their revenue shortfall using collections from a cess on GST imposed on products such as automobiles. GST receipts which had touched ₹1.13 trillion in April could not sustain that growth subsequently.

“The rules are not clear to us, but if compensation needs exceed (the) cess collected, the extra funds would go out from general fiscal expenses. While this is just a Centre-state allocation issue, it can have a negative growth impact,” said the Credit Suisse analysis.

Finance minister Nirmala Sitharaman, who has already announced several steps to improve business confidence and boost growth, on Wednesday consulted infrastructure sector representatives on ways to stimulate growth. The tight fiscal position, however, reduces the government’s headroom for offering fresh sops.

The cooling down of the economy could hurt the central government’s fiscal health, a worry accentuated by fresh data on Wednesday. The services sector, which accounts for more than half of India’s $2.7 trillion economy, lost momentum in August, according to IHS Markit, a market information supplier. The IHS Markit India services business activity index, which tracks 400 businesses across various industries including transport, information, communication, finance, insurance and real estate, retreated from 53.8 in July to 52.4 in August, signalling a slower rate of output growth, the company said in a statement. A reading above 50 indicates expansion.

The survey, which collects data from businesses in the second half of every month, pointed out that all sectors it covered, except realty and business services, showed sustained growth. IHS Markit’s composite PMI output index showed expansion for the 18th month in a row, but at 52.6 in August, the expansion was slower compared to 53.9 in July.

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“The weaker PMI readings for India’s service sector match the trend noted in the manufacturing industry, bringing unwelcome news of a cooling economy halfway through the second quarter of FY20,” said Pollyanna De Lima, principal economist at IHS Markit. Earlier in the week, IHS Markit survey showed India’s manufacturing output in August grew at the slowest pace in 15 months.

News of slower growth in services sector follows data earlier this week showing eight infrastructure industries slowed to a 2.1% expansion in July, down from a 7.3% growth in the year-ago period. Asia’s third-largest economy expanded 5% in the June quarter, the slowest pace in six years.

Credit Suisse said states received ₹6.5 trillion in GST revenue in FY19, including central government compensation, which, with a 14% growth, would touch ₹7.4 trillion in FY20. If this increase of ₹90,000 crore is not seen in aggregate GST collection, the Centre’s GST take would see a decline in FY20, Credit Suisse said.

Reuters reported, citing unnamed government officials and advisers, that the government may miss its 3.3% fiscal deficit target for the current financial year, despite receiving an additional dividend from the RBI. The gap between receipts and spending, which is met through borrowing, could go up to 3.5% of GDP, the report said.

Source: Live-Mint

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Advance ruling: A useful tool for achieving tax certainty

Advance ruling: A useful tool for achieving tax certainty

Advance ruling can be obtained in respect of registration requirement, classification, determination of time and value of supply, admissibility of input tax credit and determination of the tax liability. Taxpayers need to exercise this option with caution, compared with other modes of obtaining certainty and dispute resolution, in view of the recent trend of adverse rulings.

India embarked on its journey of ‘One Nation One Tax’ with the introduction of the goods and services tax (GST) in July 2017. The landmark legislation, which has completed two years, is the biggest tax reform in India after independence. The GST Act subsumed erstwhile indirect taxes such as excise duty, value-added tax (VAT), service tax, etc.

In order to ensure uniformity in central and state GST laws, the GST Act promulgated setting up of a GST Council to recommend changes in the law for consistent implementation by the central and the state governments.

Being a new legislation, the GST law posed challenges for both the taxpayers as well as the tax practitioners in the form of interpretation of law, classification of goods and services, admissibility of input tax credit, applicability of exemption notification, etc.

In order to ensure faster disposal of these issues, the GST law borrowed one of the aspects from the erstwhile indirect tax legislation, ie the mechanism of obtaining an advance ruling. An advance ruling helps a taxpayer to obtain the required clarity on taxability of a transaction in advance thereby enabling it to avoid future disputes.

Under the GST law, an advance ruling can be obtained with respect to registration requirement, classification, determination of time and value of supply, admissibility of input tax credit of tax paid and determination of the liability to pay tax on any goods or services or both.

The Authority for Advance Ruling (AAR) has been constituted in each state/Union territory under the GST regime. An applicant seeking an advance ruling is required to file an application before the state/Union territory AAR providing required details such as the facts of the case, issues on which advance ruling is sought along with the contentions in relation thereto. The AAR is required to give its ruling within 90 days of the receipt of the application.

There is also an appellate forum created in each state in the form of Appellate Authority for Advance Ruling (AAAR). Any applicant aggrieved by the AAR’s ruling can appeal before the AAAR. The AAAR is also required to pass its order within a period of 90 days of the filing of the appeal.

The advance ruling process has gained considerable traction under GST with close to 1,000 applications made to the advance ruling authorities by taxpayers. In a short span of two years, the AAR’s have passed rulings on various critical tax issues like tax treatment on transfer of business as a ‘going concern’, provision of back office support services by Indian entity to overseas entity, treatment of interest free security deposits, etc. One should note that while the ruling passed by the AAR and AAAR are binding only on the applicant and the jurisdictional authorities, the same carries persuasive value for others.

Thus, it can be seen that the aim of the advance rulings framework is to provide certainty and clarity to the taxpayer with respect to its obligations under the GST Act in a time-bound manner.

However, this does not mean that advance rulings are free from imperfection. One key limitation of the AAR/AAAR is that there have been numerous instances of divergent rulings being passed by different state AARs on issues such as taxability of cross charges for common administrative and IT support services by employees of one unit to other units, differential tax rates in case of solar energy sector etc. Further, there have been instances where decisions of the authorities are contrary to the position settled under the erstwhile indirect tax regime.

The GST Council, in order to address these limitation, had recommended formation of a centralized appellate authority. The Union cabinet has recently approved the formation of a national bench of the GST Appellate Tribunal (GSTAT) at New Delhi to address tax disputes due to contradictory rulings. However, the procedural guidelines of the GSTAT are yet to be issued. Thus, one may reasonably infer that the government is actively trying to address the current limitation in the existing advance ruling mechanism.

To conclude, a taxpayer should tread the path of obtaining an advance ruling with caution. The taxpayer should not only be well versed with the available jurisprudence under the erstwhile indirect tax regime but also be cognizant of the rulings passed by other AAR/AAAR, if any, on similar fact pattern. Further, it has generally been observed that cases where taxpayers have maintained appropriate documentation to substantiate their claims stand a better chance of obtaining a favourable ruling from the AAR.

While AAR/AAAR is a good mechanism for the tax payers to address their concerns, the recent trend of adverse / different rulings should be kept in mind before a tax payer opts for such a ruling. It is anticipated that once the GSTAT is fully operational, some of these concerns would get addressed. Till then, tax payers should act with caution and take this dispute resolution mechanism with a pinch of salt.

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Source: LiveMint
UT ranks first in GST return compliance

UT ranks first in GST return compliance

In a major achievement, the UT Excise and the Taxation Department has topped the country in the GST 3B monthly tax return compliance rating of 92.44 per cent among all states and UTs in the first four months of the current financial year. This has been revealed in the latest report of the GST collection and compliance. In this category, Punjab (87.72 per cent) stood second and Gujarat (86.35 per cent) third.

Sources said the city had around 18,000 registered dealers and it was ensured that maximum dealers filed the returns under the GST law. The department has recently carried out an intensive physical checking of the dealers who had not been filing their returns. After the checking, the GST registration of over 806 dealers, who failed to file return for more than six months, was cancelled. Notices have been issued to other dealers who did not file their returns.

Sources said the checking was started on the direction of Excise and Taxation Commissioner Mandeep Singh Brar, who now directed the department officials to achieve the target of up to 95 per cent GST return compliance.
The steps have been taken to ensure there was no tax evasion at the dealers’ end.

The department has collected Rs 466.94 crore as tax in the last four months with a hike of over 12 per cent against the corresponding period last year. RK Chaudhary, Assistant Excise and Taxation Commissioner, said the department also carried out a survey in various markets and directed dealers to issue proper bills to consumers.

Source: Tribune-India


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IT companies challenge government’s plan to brand BPOs as brokers & GST in court 

IT companies challenge government’s plan to brand BPOs as brokers & GST in court 

Are outsourcing units and BPOs merely intermediaries and brokers or are they exporters? About a week after the government released directions that Information Technology (IT) and Information Technology enabled Services (ITES) companies would attract 18 per cent goods and services tax (GST) for several exporters, some intermediaries have challenged the constitutional validity of such a regulation. 

Several back offices of BPOs and KPOs, already fighting the margin pressure, will have to pay 18 per cent GST after a government circular on July 18 said certain services shouldn’t be categorised as exports. As per the earlier tax regime, these companies did not attract any tax and up until 2018, even under GST, these companies would even get refunds for the input tax credits. 

However, following an authority of advance rulings (AAR) directive last December, indirect tax department had started issuing notices to several IT/ITES companies demanding up 18 per cent GST on money received on convertible foreign exchange. 

“The recent circular on intermediaries means that several back end services rendered to foreign service recipients would attract 18 per cent GST due to the place of provision of such services. We have challenged the constitutional validity of the place of provisions for intermediaries on various grounds in Gujarat High Court and the arguments would cover relief for different players including the services mentioned in the circular,” said Abhishek A Rastogi, a partner at Khaitan & Co. 

The government circular goes into length in explaining how GST should be levied on certain IT/ITES services supplied outside India as these are not exports but merely broking services. The indirect tax department had started issuing preliminary notices to captive units of multinationals and Indian companies exporting offshore support services. 

Industry trackers said the question now was whether BPOs are commission agents and brokers. If so, they would not be considered exporters and their revenues would be subject to taxes as only exports are exempted from domestic taxes and receive certain benefits. So, services provided by Indian entities to foreign companies would not be treated as exports and hence taxable in India. 

“Many BPOs and KPOs are already moving to Philippines in last few years and such a hit on the margins is set to push many more there,” said a senior tax official with an Indian IT firm. 

India currently boasts of an outsourcing market of about $50 billion a year. The government stand is set to impact the $13 bn outsourcing industry that is already facing pressure on margins, said a person in the know. 

“While the circular is not binding on the taxpayer, it’s binding on the tax officials; which means that many companies will stop getting refunds,” said a person advising one of the IT companies on the issue. 

Earlier, industry body Assocham and an IT lobby group had raised concerns around the future tax liability due to the government’s stand. Experts said under the earlier indirect tax regime, an intermediary was mainly a broker or a commission agent. However, any company supplying support services to a multinational was not treated as an intermediary. 

In the past, companies and tax experts had reached out to the government on the subject. They wanted the government to look at amending the law to treat any service provided by Indian companies as zero-rated or non-taxable if the customers were based overseas

Source: Economic-Times

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