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Photo = Yonhap news |
[Alpha Biz= Paul Lee] India’s ongoing Goods and Services Tax (GST) dispute has now extended to commercial banks, with conflicting views emerging over the taxation of expatriate employees' salaries.
According to an electronic disclosure on Monday, Hana Bank was fined INR 67.93 million (approximately KRW 1.17 billion) by India’s Directorate General of Goods and Services Tax Intelligence (DGGI) on November 13, 2023, for unpaid GST related to expatriate salaries. This marks the highest fine Hana Bank has received from any overseas branch.
India’s tax authorities have taken a firm stance on the GST issue, prompting Hana Bank to file an appeal against the decision. However, since the GST dispute affects not just Hana Bank but many foreign companies operating in India, there is speculation that the Indian tax authorities may reconsider their rigid approach.
The GST issue dates back to a May 2022 ruling by India’s Supreme Court, which determined that U.S.-based Northern Operating System must pay an 18% GST on expatriate salaries and allowances. Based on this precedent, Indian tax authorities have been enforcing GST obligations on foreign companies.
Acknowledging growing pushback from multinational corporations, Indian tax authorities have issued guidelines advising tax officers to consider contract terms between Indian subsidiaries and foreign headquarters before making tax assessments.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
