No GST on Back-End Services: CBIC Clarifies on Intermediary Services Dispute

No GST on Back-End Services

The Central Board of Indirect Taxes and Customs (CBIC) has clarified that services outsourced to India and those provided domestically for foreign entities will not be treated as intermediary services, enabling them not to pay the 18 per cent Goods and Services Tax (GST).

On 20th September, 2021, CBIC has issued a circular clarifying doubts related to scope of “Intermediary”, as more than 200 companies are involved in disputes over the definition of “intermediary” services.

The disputes started after tax authorities began treating back office service providers or business process outsourcing (BPO) entities as intermediaries, denying them export status.

A meeting of the GST Council held on 17th September and clarified that this decision will free up tax refunds to companies in information technology, IT ready services, financial services and R&D.

Click here for detailed official clarification:

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