The GST Council is likely to consider relief to foreign airlines and shippers having offices in India. Similar relief is likely be considered for Infosys and similar matters. The Council is expected to consider proposal for exempting grants and donations to educational institutions such as IIT.
The Council is scheduled to meet on September 9 in New Delhi.
According to sources, the meeting is expected to consider proposals for reliefs to various sectors including foreign airlines having branch office here. The likely proposal is exempting the import of services by a foreign airlines’ head offices abroad when received via no consideration. This proposal could also regularise past demands on as is basis. This is critical as DGGI has issued show-cause notices to 10 major foreign airlines with a demand of ₹10,000 crore. A notice was issued to a foreign shipper. Now all are expected to get relief.
Relief for Infosys
Another important issue is expected to consider relief for cases like Infosys. On July 31, the company said it had received a pre-show cause notice from the Director General of GST Intelligence over tax dues of ₹32,000 crore incurred by its overseas branch offices in FY18 to FY22. The company believed that GST was not applicable on these expenses. Additionally, a circular dated June 26, based on the recommendations of the GST Council, stated that services provided by overseas branches to Indian entity are not subject to GST. It is also important to note that GST payments are eligible for credit or refund against export of IT services.
It claimed that it has paid its GST dues and is fully in compliance with the Central and State regulations. Later it informed that it had received a communication from DGGI closing the pre-show cause notice proceedings for FY18. The GST amount for this period, as per the pre-show cause notice, was ₹3,898 crore. However, notices for dues from FY19 to FY22 are still pending and now expectation is some tweaking could take place in June 26 circular to give relief.
Other issues
At the same time, the Council is likely to deliberate upon issues affecting major IT and data hosting companies such as Amazon, Google, and Meta. Expectation is that a clarificatory circular may be issued for service providers of software, cloud computing, data hosting, etc. The circular may bring clarity on the treatment of the place of supply, what should be treated as export of services and the GST rate treatment when the recipient is abroad,” sources further said.
Issuance of notice to educational institutions including IIT Delhi sparked controversy for GST non-payment GST on grants received by them from government and non-government bodies for conducting research. Now expectation is the GST Council may consider a proposal exempting GST on grants and donations received for research purposes.
There could be proposal related with e vehicle charging stations at public places. However, the fitment committee (comprising officers from Centre and States and which prepare proposals for consideration by GST Council) may not favour exemption. Also, no relief is expected on Li-ion cells, battery packs, electric motors, and other EV components as these could result in inversion of duty (higher duty on input and lower duty on final products).
Pointers
54th GST Council Meeting: Likely on table
– Online gaming, casinos, horse racing may not get relief for past demands
– Discussion on status of compensation cess
– Lower GST on few cancer drugs, metal scrap goods
– Alignment of tax rates on snacks prepared through extrusion processes with that of other snacks like bhujia and namkeen
– Regularise GST on affiliation fees CBSE receives from State and central education boards.