GST Council may issue clarification on expat salary taxation amid controversy
The Goods and Services Tax (GST) Council may issue a circular to address the controversy surrounding the spate of notices sent to Indian arms of foreign companies seeking to tax salaries paid to expatriates by the local unit.
The circular may clarify that input tax credit should not be held back for the period 2017-2022, as the practice of sending expatriates to the Indian unit, known as secondment, amounts to exports of services, people familiar with the development said on condition of anonymity.
The proposal may be placed before the GST Council once the law committee arrives at a consensus on the issue, they said. The GST Law Committee, comprising officials from states and the Centre, advises the Council on laws, rules, and procedures.
Some of the law committee members are of the view that input tax credit should not be given to MNCs for 2017-22, invoking Section 74, as GST is being recovered late because of acts of suppression by the MNCs. Section 74 of the GST law pertains to the determination of tax evasion and the imposition of penalties in cases where the tax authority finds that a taxpayer has intentionally evaded taxes under GST regulations.
