-
Jun 29, 2024
-
MNC arms to pay GST as per transaction value quoted by parents
The Central Board of Indirect Taxes and Customs (CBIC) on Thursday clarified that if an MNC subsidiary in India as service recipient is eligible to claim full input tax credit (ITC) under the GST, the value declared by the overseas affiliate in the invoice will be treated as the taxable value.
But in cases, where the foreign affiliate does not raise an invoice, it would be presumed that the value of services is nil and no GST is required to be paid.
Companies had earlier raised concerns about tax demands arising from the reverse charge mechanism (RCM) for such services, where no consideration was made. “The clarification will help in avoiding misinterpretation and litigation on this issue by the GST authorities,” said Darshan Bora, partner at Economic Laws Practice (ELP).
|