Liaison offices of foreign companies under the GTS scanner, now liable to taxation.

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Liaison offices of foreign companies under the GTS scanner, now liable to taxation.
Nov, 2020

The Karnataka Advance Ruling Authority says that whether the foreign company's Liaison Office is within the purview of GST or not, does not depend on what the Reserve Bank guidelines say. Here taxability is determined by the provisions of GST. Since the activity of LO help in increasing business, therefore it will be considered as supply and they have to get registration in GST.

 

However, for your information, as per RBI Guidelines, LO is neither allowed to earn income nor be involved in any business activity. They mainly work as a communication channel among their clients in India or can become them on behalf of the Head Office, and the head office also bears their operational expenses.

 

Therefore, the order of the Authority will cause controversy in the coming time and will discourage foreign companies to do business in India.

 

To get the copy of the Ruling, call on 90888830000 or click at www.askdost.com

 

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