GCC Services May Qualify as Exports Under Proposed IGST Act Amendment

New Delhi, Sep 15 (KNN) Services provided by global capability centres (GCCs) to overseas entities may qualify as exports under a proposed amendment to the Integrated Goods and Services Tax (IGST) Act, potentially removing the 18 per cent GST currently applicable to such services.

The proposed amendment is likely to be discussed at the next meeting of the GST Council, which is expected to be held on October 7, according to government sources.

Under Section 13(3)(a) of the IGST Act, several GCCs are currently unable to claim export status for services performed on goods located in India, even when payments are received in foreign exchange. 

The provision treats the place of supply as India in such cases, making the services liable to GST.

“GCCs are not exporting goods. They are essentially exporting a service. But today’s rule under Section 13 of the GST Act says that if you provide a service on goods that have been made available to you in the country, the place of supply becomes India. So even if you have received the money in foreign exchange, it doesn't become an export, and you end up paying GST on it,” a senior government official told Moneycontrol.

The proposed change is likely to be discussed by the GST Council in its upcoming meeting, according to the official.

(KNN Bureau)