52nd GST Council likely to clarify taxation for co-location or data center services
Notably, the 52nd meeting of the GST Council will be held on 7th October, 2023 at Vigyan Bhawan , New Delhi.
“The council is likely to clarify that in case data centers are providing services to overseas customers with respect to storing the data, managing the data then it will be treated as an export. But in case where data centers has a contract only for providing physical space on rent then GST to be applicable at 18%,” sources told CNBC-TV18.
The issue came to the fore considering that a lot of doubts were being shared by the industry. Several multi national leaders who are providing data center services to overseas clients from India had flagged to GST authorities to avoid wrongful payment of taxes. Many companies just rent a space to overseas clients for housing servers and other computing hardware but in many cases centers not just rent a space but also provide services such as hosting and maintaining the information technology (IT) back up.
