IT dept shock to IT companies

New Delhi Nov 23: The Income tax department has given a shock to Indian IT Companies and served notices to 200 Indian IT companies and raised a tax demand of Rs 10,000 crore.

Legal Battle :

The tax department has urged the companies to refund the service tax it has claimed in the last five years (2012-2016) on software provided to clients outside India and has additionally sought 15% service tax along with fines.

"The IT department has said that "supplying software to clients outside India does not tantamount to exports for IT and ITES companies. Because the client sends specific details of what it wants in the exported software to Indian IT firms through an email."

"The email containing specifications is nothing but goods made available to the Indian firm to provide IT/ITES service to the foreign buyer. Therefore, it is a service. Hence, all IT/ITES exporters are liable to return the export benefits".

Software companies claim:

They said that they are confused about whether they should approach appellate tribunal as they need pay 10 % of claim and then the case may go on for a long time as there is no time frame for resolving this cases.

Many companies feel that this would continue in GST as the service tax rules would continue in the new tax regime too.