CBIC Directive Could Benefit Infosys Amidst Rs 32,403 Crore GST Dispute
CBIC's new directive may ease Infosys' Rs 32,403 crore GST dispute with the DGGI over foreign service imports.
Infosys office building - Corporate block
The Central Board of Indirect Taxes and Customs (CBIC) has instructed field officials to adhere to a June 26 circular for handling related party service import cases.
This could assist companies like Infosys, which is under scrutiny from the Directorate General of GST Intelligence (DGGI) with a Rs 32,403 crore pre-show cause notice for failing to pay GST on services from its overseas branches.
According to the circular, if a local entity doesn’t issue an invoice for services provided by a foreign affiliate, the cost is considered nil and does not attract GST.
Field officials must now reassess Infosys’ case and similar IT sector cases based on this new guidance.
Nasscom has raised concerns about the impact on the IT sector, arguing that the GST notices reflect a misunderstanding of how these services work.
Normally, GST is paid under the reverse charge mechanism for services from abroad, meaning the local entity must issue a self-invoice and pay the tax.
The new guidance aims to reduce disputes and legal issues. The notice to Infosys was issued before the circular came out on June 2.
