India’s BPO firms exempted from 18% GST
India’s US$180 billion Business Process Outsourcing (BPO) industry will be exempted from the 18% Goods And Services Tax (GST) as approved by the GST Council.
According to a report from the Economic Times, this move is part of the government’s plan to reduce GST disputes in the sector as outsourcing firms filed cases against being treated as intermediary services and therefore compelled to pay for their GST.
The removal of the 18% tax will help the BPO firms that operate on thin margins to face competition from emerging low-cost outsourcing destinations such as the Philippines and Malaysia among others.
The GST Council’s decision will free up the tax refunds of companies in the information technology (IT), IT-enabled services (ITeS), financial services, and research and development industries, as well as resolve some legal issues that have led to large-scale litigations in the country.
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