CBIC directs use of June circular to address GST issues on related party service imports: Report

The Directorate General of GST Intelligence (DGGI) sent  Infosys a Rs 32,403 crore pre-show cause notice on July 30 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.

Central Board of Indirect Taxation and Customs has requested that field authorities use its June 26 circular while evaluating issues on related party import of services by local firms, sources told ET.

Infosys and other software businesses that are threatened by large goods and services tax (GST) demands may find some comfort from the move. The cost of services rendered by a foreign affiliate is considered to be zero if a linked domestic firm has not yet received an invoice for such services, according to the circular, according to the ET report.

Therefore, no GST would be applied to such services. The Directorate General of GST Intelligence (DGGI) sent Bengaluru-based Infosys a Rs 32,403 crore pre-show cause notice on July 30 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, reported ET.

In light of this direction, field officers are now required to re-examine the Infosys case as well as those of other companies in the information technology (IT) and IT-enabled services (ITeS) sector following the company's response, according to ET.

Credit - Money Control