Income Tax Appellate Tribunal Rules GST Exclusion in Presumptive Taxation

Tribunal affirms GST as a statutory levy not to be included in gross receipts under Section 44BB of the Income Tax Act.

The Income Tax Appellate Tribunal (ITAT), Mumbai "I" Bench, in a significant ruling, has held that the Goods and Services Tax (GST) collected as a statutory levy should not be included in the gross receipts for computing presumptive income under Section 44BB of the Income Tax Act, 1961. This decision came in the appeal filed by Oceaneering International GmbH against the Deputy Commissioner of Income Tax, concerning the assessment year 2023-24.

The bench, comprising Shri Vikram Singh Yadav, Accountant Member, and Shri Sandeep Singh Karhail, Judicial Member, emphasized that including GST in gross receipts would lead to taxing a statutory levy, thereby imposing a tax on tax. The ruling was consistent with previous decisions by various High Courts and Coordinate Benches, which confirmed that indirect taxes like GST or service tax do not have an element of income and should be excluded from gross receipts in presumptive taxation.

The tribunal further clarified that Section 145A of the Income Tax Act, which mandates the inclusion of taxes for valuation, does not override the specific provisions of Section 44BB. The collected GST is a statutory levy and is not part of business receipts or deemed income under Section 44BB.

This decision underscores the tribunal's alignment with judicial precedents, reinforcing the principle that statutory levies are to be excluded from the computation of presumptive income, thus providing clarity and consistency in tax assessments for non-resident entities engaged in specific business operations.

Bottom Line:

Income Tax - GST collected as a statutory levy should not be included in gross receipts for computing presumptive income under Section 44BB of the Income Tax Act, 1961.

Statutory provision(s): Income Tax Act, 1961 Section 44BB, Section 145A

Oceaneering International GmbH v. Deputy Commissioner of Income Tax, (ITAT)(Mumbai "I" Bench) : Law Finder Doc Id # 2821700