The Centre will soon bring services provided by the office of a company in one state to an office in another state under the purview of the goods and services tax (GST), the Economic Times reported.
Those eligible can claim the input tax credit and a circular sanctioned by the
GST Council which would enumerate the particulars would be sent out soon, the paper stated. Companies from the power, healthcare, liquor, and education sectors would, however, be exempt.
The move came after the Karnataka Authority for Advance Rulings (AAR) stated that human resource and payroll tasks carried out by companies across states would face GST and have invoices issued.
The GST Council’s law committee will, via the circular, clarify issues such as head office functions, payroll, procurement, distribution and management expenses, branch maintenance, etc. The circular would be in FAQ format and lay down particulars for distribution of tax between head office and branches, it added.
Experts said the government should consider the intent and adopt a pragmatic approach by making the process optional. It should recognise that employees of a company – from any state – is an employee of that organisation and cross-charge of salary would not be needed. They also expressed concern that the process could cause confusion and extra paperwork.
Source: moneycontrol.com