Breather for BPOs: Government withdraws contentious GST Circular on back office support services

Months after putting India’s business process outsourcing industry in a quandary, the government has withdrawn the circular that said anyone engaged in the facilitation of supply of goods/services will not be considered to be engaged in export and will now be considered as intermediary, unless it is on his own account.

With this circular most BPO-KPO services were being treated as intermediaries under GST rules and could be taxed under GST. This meant GST authorities were denying any MNC BPOs refunds of amounts paid on inputs, saying the work done for parent companies can’t be considered as exports and will be counted as a service for the same entity.