The Central Board of Indirect Taxes and Customs (CBIC) has withdrawn a circular which created confusion on whether IT service providers can be qualified as intermediaries based on self-assessment under the goods and services tax (GST).
The government has withdrawn circular in view of numerous representations received expressing apprehensions on its implications.
"In view of these apprehensions and to ensure uniformity in the implementation of the provisions of the law across field formations, the Board (CBIC),...hereby withdraws, ab-initio, Circular No. 107/26/2019-GST dated 18.07.2019," an official notification said.
The government earlier in the year issued a circular on the scope of information technology-enabled services (ITeS) and coverage under intermediary services.
The said circular had created confusion, with this, leaving an onus on ITeS service providers self-assessing on whether they qualified as an intermediary. This entailed a spate of notices being issued on ITeS firms.
Commenting on the withdrawal of circular, EY Tax Partner Abhishek Jain said the earlier circular had fuelled ambiguity for back office support centres specifically on whether some of the activities performed by them entailed their coverage under 'intermediary'.
While withdrawal of the circular should be helpful, the industry as well looks forward to an explicit clarification on the scope of intermediary; to avoid unwarranted litigation and possible financial repercussions and uncertainty, he said.
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