New Delhi, October 8 (Daily Kiran) : The industry body Nasscom expressed its approval of the GST Council’s recent recommendations, which aim to resolve persistent issues related to service exports, input tax credits, refunds, and compliance. The proposed changes also indicate a more balanced approach to enforcement concerning notices, prosecutions, and arrest powers.
In a statement, Nasscom highlighted the constructive engagement of the central and state governments, the Finance Ministry, and the CBEC in addressing these issues. The organization particularly welcomed the recommendations concerning services provided through overseas branches of the IT-ITeS sector. Indian companies frequently offer services to foreign clients via these branches, but existing laws do not classify these services as exports, as they are considered part of the same entity.
Nasscom noted that the Council’s recommendation to remove this restriction addresses a long-standing concern that the organization had raised with the government. With other export conditions met, this change is expected to reduce tax-related uncertainties, litigation, and unnecessary working capital costs.
The GST Council also recommended changes to the supply location rules for research, testing, certification, and engineering services conducted in India on goods owned by foreign clients. Under the current system, such services are not classified as exports due to the physical presence of the client’s prototypes or samples in India.
Proposed changes could benefit engineering R&D firms, Global Capability Centers (GCCs), and deep-tech startups providing eligible research and testing services to foreign clients. This shift may also help India attract more global research and engineering work.
In the e-commerce sector, Nasscom welcomed the proposed simplified registration process for small vendors using platform warehouses in other states. This change will assist small businesses in participating in interstate online commerce without the need for separate establishments in each state.
Additionally, Nasscom supported the proposal to extend inverted duty refunds to input services, the eligibility for refunds on plant and machinery, and the expedited processing of refunds. The Council’s recommendation to allow input tax credits on employee health and life insurance will also address another long-standing concern within the industry.
According to Nasscom, these changes will help reduce the amount of legitimate tax credits tied up in business-related expenses.
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