Genpact has another Tax Win
By Amlan Mohanty

Genpact was India’s first BPO and continues its leadership position in India.  Genpact has more than 41,000 employees and reported revenue of $400 Million in the last Quarter.  Genpact started life as a Business Unit of GE, but by January 2005 it became an independent company.  Two years later, it was listed on the NYSE. NASSCOM ranks Genpact as the No. 1 BPO company in India.

While Genpact is well known as India’s top BPO, it also does substantial computers systems and tech support for overseas clients.  In that sense, it is a tech company as well.

In August, 2011, Moneycontrol reported a big tax win for Genpact.  An Indian Court ruled that Genpact India is not a representative of GE USA and is not liable to pay capital gains tax.

Quite separately, Genpact has had another major Tax win which was not reported by media.  As a result of a recent judgment delivered by the Delhi High Court, Genpact India is set to derive significant tax benefits, based on deductions permitted to newly established undertakings for export of articles such as computer software.

The main issue in this case was whether 'telecommunication expenses' that were incurred by Genpact India were to be included as part of their 'total turnover'. This is an important question since excluding it from the purview of total turnover would permit it to obtain additional tax deductions under Section 10A of the Income Tax Act of India.

The Court agreed with the legal team for Genpact India who argued that the export turnover was a component of total turnover, and since export turnover allowed for exclusion of telecommunication expenses, it should be excluded from total turnover as well.  Thus, Genpact gains significantly from this decision, although an appeal from the Revenue officials is expected.

You can read the Delhi Court judgment at this link