Infosys vs USD 4 Billion GST: CBIC sensitises officials about June circular as tax experts bat for clarity
Central Board of Indirect taxes and Customs has asked field officials to take into account its June 26 circular when considering matters about related party import of services by local entities, people familiar with the development said. The move could provide relief to Infosys and other tech companies facing the threat of massive goods and services tax (GST) demands.
As per the circular, if a related domestic entity has not issued an invoice for a service provided by its foreign affiliate, the cost of such services is deemed to be nil. Such services would, therefore, not attract any GST.
On July 30, Bengaluru-headquartered tech firm Infosys received a Rs 32,403 crore pre-show cause notice from the Directorate General of GST Intelligence (DGGI) for “non-payment of Integrated GST on import of services” from its foreign branches for the period July 2017, when GST was rolled out, to the FY22.
Field officers are now expected to re-examine the Infosys case, after the company’s response, and that of others in the information technology (IT) and IT-enabled services (ITeS) industry in light of this directive.
“They (field officials) have been sensitised on the circular issued on valuation of supply of import of services by a related person where recipient is eligible to full input tax credit,” said one of the persons cited above.
It was an informal communication to reiterate and explain the circular, another person said. ET reported on Thursday that over half a dozen IT services companies based out of Delhi-NCR,
