Indian tax authorities are alerting overseas gaming, fintech and content service providers in places like the US, Malta, and Curacao about the goods and services tax (GST) law to spare them nasty surprises later. Driving the news: The Bangalore nodal office of Central Board of Indirect Taxes and Customs, which administers GST, is sending emails to these offshore business-to-customer (B2C) entities, informing them of the tax. Many companies whose products are used by Indian residents for entertainment, trading and education have so far received the email from the tax office. Yes, but: Two years ago, some overseas companies that were unaware of India’s new tax were put off by notices from the tax department. While many foreign companies complied and paid the tax to close the matter, some of them questioned the practice of serving notices or summons via email. “The overseas entities were of the impression that such communications, in accordance with international law, must be routed through their respective governments, as the local tax department does not have jurisdiction,” said a lawyer specialising in taxation of digital services. Domestic companies have to pay GST only if their turnover exceeds Rs 20 lakh, but there is no such threshold for foreign companies. The tax office can impose a 15% penalty if it believes GST was “intentionally avoided”. Some companies forked out the penalty as the amounts were not large enough to initiate litigation, but they were upset at having been categorised as tax evaders.

Economic Times