Government promises to look into IGST leeway for foreign banks

The government has promised to look into giving respite to foreign banks from the additional cost of paying 18% integrated goods and services tax (IGST) on services provided to their international offices.

In a reply to the Delhi High Court on a writ petition filed by DBS Bank challenging the IGST levy, the government on Wednesday said it would address the issue in the upcoming GST Council meeting on Friday.

“The government wants to give a clear message to overseas investors that they are investor friendly,” a person aware of the development said. “Also, the multinationals could approach the government directly rather than approaching the courts,” the person said.

DBS Bank declined to comment.

ET had first reported on October 26 that government is looking to extend IGST relief for foreign banks.

Under the goods and services tax (GST) framework, a multinational — especially a foreign bank or infrastructure company — that has a branch or operation in India, has to pay IGST on services provided to its offices outside the country. This is because GST framework considers services provided by one branch to another as interstate supply.