Tax officers based in small towns have started sending notices to many financial services companies seeking information regarding these firms' organisational structures, revenues and Goods and Services Tax (GST) paid.
A spurt in such written queries has scared companies that fear an increase in their compliance burden. Businesses that have come under the radar of indirect tax offices are as distant as Kolhapur, Rajahmundry, Vijaywada, Mysore and Mangalore, the Economic Times reported.
Companies under the GST structure are required to have a registration in every state. In case of any queries, the tax officials based in the city where a firm is registered send the notice.
However, small-town tax officers are hiding behind a specific section in the GST structure they have interpreted to understand that any indirect officer can send query notice to any transaction by any company from any part of the country.
"Provide brief note of organisational structure, details of turnover whether taxable, exempt, nil rated or non-GST turnover.. details of place of supply," read a written query sent to a financial services company in Mumbai.
Meanwhile, the industry trackers said that in many instances companies are complying and furnishing details to tax officials based in the capital of the same state, the report said.
"The compliance requirements in GST for service providers are significantly higher than the erstwhile service tax regime and the need to respond to inquiries from various parts of the country leads to additional pressures on businesses. A single authority should be empowered to enquire/investigate all GST issues of a service provider instead of multiple authorities, which will lead to efficiencies on both sides," MS Mani, partner, Deloitte India told the news daily.
In case of Andhra Pradesh, all companies operating in the state are registered in Hyderabad but are receiving notices from indirect tax officers from smaller towns in the state.