Finance Companies Receive GST Enquiries From Small-Town Tax Officials

Tax officers based out of small towns have started sending written enquiries to financial services companies asking for information related to revenues, organisational structures, and GST payments made. After receiving such notices, companies are fearing that their compliance burden could increase. Financial services organisations in states such as Rajahmundry, Kolhapur, Mysore, Mangalore, and Vijaywada have been under the scanner from the indirect tax offices.

Under the GST structure, organisations need to register in each state; in most queries or cases, if any, are raised by a tax official based out of a city where it has been registered.

Nevertheless, mofussil tax officials are taking protection under a specific section under the GST framework. As in, any indirect tax officer will have the authority to inquire any transaction of any organisation from anywhere in the country.

The compliance needs in GST concerning service providers are considerably higher in comparison to the erstwhile service tax regime. Hence, the need for responding to inquiries from across the country will lead to additional pressure on businesses.

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Industry experts think that a single authority needs to be in place to investigate as well as enquire all GST-related issues of a service provider versus multiple authorities. 

When we take Andhra Pradesh as an example, all the companies within the state have been already registered in Hyderabad. However, the notices are being sent by the indirect tax officials from smaller towns within the state. Trackers within the industry mentioned that most companies are already providing the needed information to tax officials. 

For any clarifications/feedback on the topic, please contact the writer at bhavana.pn@cleartax.in