3 hrs ago
Nasscom Seeks GST Clarity on Overseas Branch Exports
Nasscom represents companies that provide technology and other services.
It wants clearer rules about when services sent to customers in other countries count as exports under GST.
One question is whether it matters if a company serves customers through its own overseas branch.
Another is how to treat work done in India on a sample or prototype supplied by a foreign customer.
Nasscom says the work should count as an export if the customer uses the results abroad.
Current rules generally focus on where the work is done.
The group says uncertainty can lead to disputes and extra costs for companies.
It raised the issues before the GST Council’s scheduled October 8 meeting.
Nasscom raised two unresolved GST issues affecting exports of services ahead of the GST Council meeting scheduled for October 8.
It says a company’s use of overseas branches should not alone determine whether services supplied from India qualify as exports.
Nasscom also argues that Indian R&D, engineering or testing work on customer-provided prototypes should qualify as an export when the customer uses the results abroad.
Nasscom says current rules generally treat prototype work as supplied in India because the work is performed there.
The industry says differences between overseas-branch and subsidiary arrangements can lead to input tax credit reversals, compliance burdens and litigation.
- Who
- Nasscom, represented in the statement by Vice President and Head of Public Policy Ashish Aggarwal.
- What
- Nasscom sought clarity on GST treatment of services supplied through overseas branches and Indian R&D, engineering or testing work on prototypes supplied by overseas customers.
- Where
- New Delhi; the issues concern Indian service exports and work carried out in India for overseas customers.
- When
- Nasscom made the statement ahead of the GST Council meeting scheduled for October 8; the report is dated October 6.
- Why
- Nasscom says clarification could support competitiveness, release working capital, reduce compliance burdens and prevent litigation.
Key facts
- Industry body
- Nasscom
- GST Council meeting
- Scheduled for October 8
- Issue one
- GST treatment of services supplied from India through overseas branches
- Issue two
- Export status of Indian R&D, engineering or testing on prototypes or samples provided by overseas customers
- Nasscom representative
- Ashish Aggarwal, Vice President and Head of Public Policy
- Prior clarification
- Nasscom said the Council's 2021 clarifications settled export status for GCCs serving foreign group companies.
- Industry concerns
- Nasscom says the current framework can lead to input tax credit reversals, additional compliance burdens and litigation.
Quotes
Ashish Aggarwal
Nasscom Vice President and Head of Public Policy
“The current rules generally treat such a service as supplied in India, where the work is done, and deny it export treatment. The customer receives and uses the result abroad, and the service should qualify as an export.”
livemint.com
“The Council's 2021 clarifications settled export status for GCCs serving their foreign group companies, and the omission of the intermediary provision this year removed a long-standing source of dispute for IT-BPM firms”
livemint.com
Sources
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