After being subject to months of haggling and histrionics, the Goods & Services Tax (GST) finally is going to have its historic implementation day on 1st July 2017, paving the way for what is popularly referred to as the concept of “one nation, one tax.” This constitutional amendment will enable both the Centre and the States to simultaneously levy the GST, which will count all indirect taxes currently levied, including excise duties and service tax. GST was introduced in the Lok Sabha on December 19, 2014 by Finance Minister Arun Jaitley. The Rajya Sabha passed the Bill on August 3, 2016 and the amended Bill was passed by the Lok Sabha on August 8, 2016. GST is now going to be executed and implemented by July 1st 2017.
Counted as one of the most powerful tax reforms in our country, Goods and Services Tax (GST) will be levied on consumption rather than production. India has been grappling with multiple indirect taxes for a long time, so the introduction of GST is seen as a landmark in the country’s taxation regime. Rahul Agarwal, MD & CEO Lenovo India, in light of the GST roll out said, “As we prepare for the GST roll out next month, we have seen interest from the market, especially in the small business and government segments. The new tax regime places an added emphasis on the Government’s focus on digital, and we are seeing a clear transition taking place at the ground level with small businesses and public sector businesses ramping up their technology usage to comply with the revised requirements. Moreover, the increased reliance on technology is sure to improve transparency within the system, and enhance India’s ranking on the World Bank’s Ease of Doing Business index.”
“We believe Goods and Services Tax (GST) will act as a catalyst to speed up the digitization drive across the nation as small and medium businesses look to transition to a transparent tax system”
Most industries are likely to fall under the blanket of its impact. However, the IT sector with services such as software development, mobile app development, website design and more, is one of the major sectors that is likely to be impacted. Sumeer Chandra, MD, HP Inc. India on GST excerpts, ““We believe Goods and Services Tax (GST) will act as a catalyst to speed up the digitization drive across the nation as small and medium businesses look to transition to a transparent tax system. With GST, PC adoption is expected to accelerate as they will play a pivotal role in enabling compliance and adoption of the new regime. As a longstanding partner in India’s digital transformation, HP continues to support the government and all stakeholders in enabling this reform and we are also offering an integrated GST solution that allows traders and MSMEs to make a smooth transition.”
“The new tax regime places an added emphasis on the Government’s focus on digital, and we are seeing a clear transition taking place at the ground level with small businesses and public sector businesses ramping up their technology usage to comply with the revised requirements.”
MD & CEO
GST Rates in Various Countries
|Country||Rate of GST|
All the taxes that GST Absorbs:
Central taxes that the GST will replace
- Central Excise Duty
- Duties of Excise (medicinal and toilet preparations)
- Additional Duties of Excise (goodsof special importance)
- Additional Duties of Excise (textiles and textile products)
- Additional Duties of Customs (commonly known as CVD)
- Special Additional Duty of Customs (SAD)
- Service Tax
- Cesses and surcharges in so far as they relate to supply of goods or services
State taxes that the GST will Subsume
- State VAT
- Central Sales Tax
- Purchase Tax
- Luxury Tax
- Entry Tax (all forms)
- Entertainment Tax (not levied by local bodies)
- Taxes on advertisements
- Taxes on lotteries, betting and gambling
- State cesses and surcharges
“It is imperative for us to keep our partners well versed with any changes that would affect their business in the coming time.
Vice President & CFO
GST Benefits for Businesses and Industries
Economists are predicting that GST will provide the most required boost to the country’s economy as India continues to attract more Foreign Direct Investments (FDIs). While a lot has been said about GST’s positive impact on business perhaps the biggest beneficiary of this tax reform will be the MSME sector, especially start-ups and entrepreneurs.
- Reduce hassle and expense
- One GST rate and one mechanism
- No overlapping of taxes
- GST improves competitiveness
GST Preparedness among Indian Traders/Partners
While GST is expected to play a crucial role in growth of the economy and bring endless opportunities to businesses, the confusion of varying tax slabs on different products are growing among the traders. The variable tax slabs on IT products has created a cause of concern among the IT Channel Partner community of India. . Keeping a note regarding the concerns of Partners, Federation of All India Information Technology Associations aka FAIITA, which is a registered national umbrella body over all state IT federations/ associations representing direct business interests of its, 30,000 (thirty thousand) pan India member-business organizations, pursuing business nearing T20, 000.00 Crores has presented a has written a letter to the GST Council of India.
Anuj Aggarwal, Vice President & CFO, Canon India says, “It is imperative for us to keep our partners well versed with any changes that would affect their business in the coming time. To educate them on the same, we have conducted awareness sessions for all our partners in different cities of the country. Mailers with complete updates on policies are being sent out for their knowledge. Our teams are constantly connected with them to keep them informed on any developments.”
The Way Ahead…..
Even though new provisions under the GST structure such as time-bound processes and clarity on electronic download classifications will ease the process of conducting business for IT companies, there still remain several concerns, especially tax exemptions, which need addressing. The government should ensure the GST legislation addresses the aforementioned challenges so that the reform turns into a success for the IT sector. SME markets are hoping that the proposed GST would provide the much-awaited push to their trade from the micro perspective.. Once the system is in place, the long-term benefits and hurdles will become clear, slowly and gradually.