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GST: Submission requesting for inclusion of IT/ ITeS and OIDAR under list of notified goods and services under S.16(4) of IGST Act
GST: Submission requesting for inclusion of IT/ ITeS and OIDAR under list of notified goods and services under S.16(4) of IGST Act

April 13, 2021

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As you may be aware, S.16(3) of Integrated Goods and Services Tax Act, 2017 (IGST Act) allows a registered person making zero-rated supplies to claim refund as per provisions of S. 54 of Central Goods and Services Tax Act, 2017 (CGST Act) under either of the following two options:

  • Option 1 - Refund of unutilised Input Tax Credit (ITC) under bond/Letter of Undertaking (LUT), without payment of IGST
  • Option 2 - Refund of IGST paid on exports (i.e., rebate option) – Supplies are made on payment of IGST against which refund of tax paid on such outward supplies is claimed.

However, due to an amendment introduced in Union Budget 2021-22, the option for claiming refund of tax paid on supplies with payment of IGST, originally covered under S.16(3)(b), is now being dealt with under the newly inserted S.16(4).

The new sub-section restricts availability of rebate option to a class of persons engaged in export of a class of goods or services. However, till date, the class of persons eligible for rebate option has not been notified by the government. This could result in difficulties for exporters as refund claims filed in respect of unutilized ITC under LUT is often marred by prolonged adjudication, resulting in unnecessary hardships and causing an adverse impact on working capital.

In this regard, we have made a submission to GST Policy Wing requesting them to include Information Technology (IT)/ IT enabled Services (ITeS) sector in the notified class of taxpayers and also include goods/services provided by IT/ITeS companies in the list of notified goods and services under S. 16(4) of IGST Act. Further, since majority of IT/ ITeS provided through electronic network fall within the ambit of "online information and database access or retrieval" (OIDAR) services as defined under S.2(16) of IGST Act, we have also requested for inclusion of OIDAR services in the list of notified goods and services.

We will keep you posted on further developments in this regard.


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Tejasvi

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