IT companies challenge government’s plan to brand BPOs as brokers & GST in court

Mumbai: Are outsourcing units and BPOs merely intermediaries and brokers or are they exporters? About a week after the government released directions that Information Technology (IT) and Information Technology enabled Services (ITES) companies would attract 18 per cent goods and services tax (GST) for several exporters, some intermediaries have challenged the constitutional validity of such a regulation.

Several back offices of BPOs and KPOs, already fighting the margin pressure, will have to pay 18 per cent GST after a government circular on July 18 said certain services shouldn’t be categorised as exports. As per the earlier tax regime, these companies did not attract any tax and up until 2018, even under GST, these companies would even get refunds for the input tax credits.