Exclusive | GST crackdown on Global Capability Centres and MNCs; industry calls for urgent clarity
India’s booming Global Capability Centre (GCC) ecosystem and Indian subsidiaries of multinational corporations (MNCs) have come under heightened scrutiny from Goods and Services Tax (GST) authorities.
Sources have told CNBC-TV18 that “tax officials at both state and central levels, along with the Directorate General of GST Intelligence (DGGI), have launched an extensive investigation into the export status of services offered by these firms.”
“Summons and notices have reportedly been sent to several companies operating in key business hubs such as Bengaluru, Haryana, Maharashtra, Pune, Chennai, and the National Capital Region (NCR),” sources added.
Authorities are probing “whether services provided to overseas clients — including backend technology, content development, marketing, design, and R&D — qualify as exports or fall under the taxable category of ‘intermediary services’,” sources added.
Export or Intermediary? The Heart of the Dispute
At the core of the issue lies the interpretation of the term “intermediary” under the GST law. Under existing rules, services exported from India are considered zero-rated, meaning they are exempt from GST and eligible for input tax credit (ITC) refunds — a key benefit that makes Indian services competitive globally.
However, services classified as “intermediary” — where the provider facilitates a transaction between two other parties — are not considered exports and are taxable in India. Tax officials are currently examining business models, client contracts, and invoicing structures to determine whether companies are operating on their own account or merely facilitating services, which would make them intermediaries.
