The Indian government is trying to provide some relief to foreign banks and multinationals which are saddled with the additional cost of paying 18% integrated goods and services tax (IGST) on the services provided to their international offices, according to reports.
An advisory to this effect may be issued by the tax department in the coming weeks, as under the GST framework, a multinational company that has a branch or operation in India, has to pay IGST.
Many foreign banks have already started paying 18% IGST to avoid any litigation and this tax liability has emerged under the GST framework. It considers services provided by one branch to another as interstate supply.
Many Indian banks can also be affected as a result especially the ones that have branches outside India but the legislation around this regard is not clear, as of now.