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India 18% GST on back office outsourcing exports

  • Nov 26, 2018 | Richard Asquith

India 18% GST on back office outsourcing exports

An Indian advance rulings authority has held that Indian businesses providing non-resident companies with certain accounting outsourced services will have to charge 18% Goods and Services Tax.

Generally, under OECD VAT or GST rules, exports of services to businesses are indirect tax-free. This ruling could potentially damage India’s outsourcing businesses since non-resident businesses will struggle to recover the 18% tax levy.

Details of the case included:

  • The Indian outsourcing company provided outsourced sales and purchase contract execution services, including preparing: sales contracts; sales invoices; and purchase orders. Payment processing for sales and purchases. Maintaining payroll records and payroll processing.
  • The outsourcing company applied for a ruling on whether the above services should be considered a nil-rated GST export service where the customers were not Indian residents.
  • The Maharashtra Authority for Advance Ruling committee found that the services were arranging and facilities for the supply of services between its clients and customers, which are GST-liable intermediary services – and not export services.

The interpretation of back-office accounts services as intermediary services instead of export services will be concerning for many Indian services providers given the extra unrecoverable costs they may now incur.

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VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He can be contacted at: He is part of the European leadership team which won International Tax Review's 2020 Tax Technology Firm of the Year. Richard trained as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.