The Income Tax Appellate Tribunal (ITAT), Mumbai, has delivered an important ruling on the treatment of Goods and Services Tax (GST) for non-resident taxpayers.
According to the tribunal’s decision, GST collected by a non-resident assessee must be excluded from ‘gross receipts’ when determining presumptive income under Section 44BB of the Income-tax Act, 1961. This clarification is significant for non-residents engaged in specific business activities in India, as it directly impacts their income calculations and tax liabilities.
A Bench consisting of Vikram Singh Yadav, the Accountant Member, and Sandeep Singh Karhail, the Judicial Member, has granted approval for the appeal made by Oceaneering International GmbH for the Assessment Year 2023-24.
The Bench instructed the Assessing Officer to exclude Goods and Services Tax (GST) when calculating income under the presumptive taxation provisions. This decision aims to clarify the treatment of GST in income computations for the specified assessment year.
The view of the court is that GST shall not form part of gross receipts towards evaluating income u/s 44BB of the Act, and the AO is hereby asked not to include Rs 22,76,54,279 for GST while calculating the gross receipts in the taxpayer’s hands.
The taxpayer, a non-resident company, is in offshore and corresponding activities, and was evaluated u/s 44BB, which provides for presumptive taxation of specific non-resident businesses.
Read Also: ITAT Mumbai: GST Collected by Foreign Firm Not Part of Gross Receipts U/S 44BB
The Assessing Officer included GST collected by the taxpayer as part of “gross receipts” and calculated income at the specified presumptive rate. Dispute Resolution Panel (DRP) kept the same method, which directs the taxpayer to submit an appeal before the Tribunal.
The problem before ITAT was whether GST collected via the taxpayer could be considered as part of gross receipts for the objective of evaluating presumptive income u/s 44BB of the Income Tax Act.
The Bench cited that in previous years, the problem was decided in the taxpayer’s favour. The ITAT, relying on a series of coordinate bench decisions, ruled that GST is a statutory levy, collected via the taxpayer on behalf of the Government. Income or consideration for services rendered does not signify that.
The Bench stated that the GST or Service Tax collected by the taxpayer does not form part of “gross receipts” for computing presumptive income u/s 44BB of the Income Tax Act, 1961, as these are statutory levies collected on behalf of the Government and contain no income element.
The bench said that section 44BB is a special provision with a non-obstante clause, and income needs to be calculated on the mentioned amounts in the section. The same, including GST in gross receipts, shall be directed to charge a tax which is not allowable in law.
The Bench reaffirmed that indirect taxes like GST could not be included in taxable income even within presumptive schemes.
Also, the Bench said that GST is specified separately in invoices and is deposited with the Government, supporting that it could not be considered as part of the income of the taxpayer.
The ITAT in the aforesaid view has asked the assessing officer not to include GST amounts in gross receipts at the time of calculating income u/s 44BB and permitted the appeal of the taxpayer on the same issue.
| Case Title | Oceaneering International GmbH vs. DCIT (International Taxation) |
| Case No. | ITA No. 6705/Mum/2025 |
| For Assessee | Shri A.K. Jawadwala |
| For Revenue | Shri Krishna Kumar |
| Mumbai ITAT | Read Order |
