IT & ITeS sector in a tax quandary

Economy


New Delhi: The country’s $147 billion IT and ITeS industry, including the back offices of several multinationals such as Genpact and WNS Global, has sent an urgent request to the government on denial of export status that has made them liable to 18% goods and services tax. The industry fears it could cascade into denial of refunds on taxes paid on inputs, as well as audits, probe and tax demand. The industry has sought immediate government intervention in the matter.

According to industry estimates, 200-plus companies have some form of dispute on the definition of “intermediary” services. There is no GST levied on goods or services exported, but intermediary services are taxed even if supplied to foreign entities. Back-office services were in the pre-GST regime treated as exports and not taxed. GST authorities have started disputing the status of export earnings and are seeking to treat those as “intermediary” services. Industry body Nasscom has represented the matter to the finance and commerce ministries for expeditious resolution. “There are increasing cases where the GST authorities have aggressively interpreted the scope of intermediary services to cover ITeS/ BPM,” it said in a representation, seen by ET.

The implication of treating ITeS/ BPM as “intermediary”, it said, was that exports get taxed at 18%. Refund claims on input credit of GST are denied, it said, adding: “This is resulting in denial of refunds, excessive investigations, litigation and making ITeS/BPM in India uncompetitive.” The issue arose following a Maharashtra Appellate Authority for Advance Rulings decision in a case involving VServe Global. The appellate body in February 2019 upheld an Authority for Advance Rulings decision that back-office support services to overseas customers were intermediary services and hence liable to tax and not eligible for tax refunds.

Loading...



Source link

Articles You May Like

Recession ends for rich, crisis persists for others
Apple has quietly dropped 22% from its peak, giving up $500 billion in market cap
Walmart expands fashion focus with new private clothing label
Dow futures jump 200 points continuing rebound from September sell-off; Nike shares rise
U.S. Steel, Tesla, Unity Software, Beyond Meat & more

Leave a Reply

Your email address will not be published. Required fields are marked *

Loading...