Economy

Multiple taxation points under GST worry IT industry

Venkatesh Ganesh Kurmanath KV Bengaluru/Hyderabad | Updated on January 17, 2018 Published on August 04, 2016

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Concerns raised over impact on export competitiveness

With the passage of the GST Bill, IT companies are concerned over multiple taxes and how it would impact the export competitiveness of the $150-billion industry.

Nasscom President R Chandrashekhar told BusinessLine that while the GST will streamline the taxation system, it will open up multiple taxation points. The industry association has submitted a 72-page ready-reckoner to its members, throwing light on various provisions that will have a bearing on the industry.

Further, a delegation also met up with Finance Minister Arun Jaitley and top officials to highlight the concerns.

“We have represented our concerns to the Finance Ministry. There is a recognition of the problem. We anticipate a positive discussion and response on our concerns,” Chandrasekhar said.

Taxation points

The issues staring at the industry’s face has largely to do with taxation.

“For IT services, it has been simple. A single point of taxation which is Central Service Tax, one point of registration, one place for refunds and one invoice.”

Under GST, it could go up as high as 111 points of contact because of Central GST, Inter-State GST and State GST.

Other industry head honchos believe that, ultimately, it should not dilute the principle around ease of doing business in the country.

According to Abidali Z Neemuchwala, CEO and Member of the Board, Wipro, the government must collectively ensure there is no drifting away from the intent of the Bill and the cornerstone principles of improving ease of doing business and reduced tax-related litigation in the country.

Export competitiveness

This also raises concerns over export competitiveness.

“The IT sector could be impacted by complex billing and invoicing requirements due to place of supply and valuation, reverse charge of GST on import of services used as inputs for export, and removal of exemptions for SEZs,” said Saurabh Srivastava, co-founder, Indian Angel Network.

Some others opined that implementing the GST itself will be challenging.

BVR Mohan Reddy, Executive Chairman, Cyient, said challenges — such as increased documentation, and multiple registrations for companies having pan India operations — need to be addressed.

There is also the issue of valuation of IT services.

“How do you value something intangible such as software services,” asked Chandrasekhar.

Published on August 04, 2016

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