Quick Summary
The Goods and Services Tax (GST) Council is deliberating on issuing a circular to resolve the recent controversy surrounding notices sent to Indian subsidiaries of foreign companies regarding the taxation of salaries paid to expatriates. This potential circular aims to provide clarity on input tax credit withholding for the period 2017-2022, particularly concerning the practice of secondment, which is seen as export of services. Sources familiar with the matter have revealed insights on the prop
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FAQ :
The GST Council is addressing controversy surrounding notices sent to Indian subsidiaries of foreign companies regarding the taxation of salaries paid to expatriates and the withholding of input tax credit.
The proposed clarification suggests that the secondment of expatriates to Indian units is considered an export of services, and therefore, input tax credit should not be withheld for the period 2017-2022.
The decision is being deliberated by the GST Council, with input and consensus needed from the GST Law Committee, which includes state and central government officials.
Yes, there are divergent views within the GST Law Committee. Some members support allowing input tax credit, while others suggest invoking Section 74 of the GST law due to alleged late GST recovery.
If issued, the circular is anticipated to allow multinational corporations to claim input tax credit for the period 2017-2022, providing significant relief.
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