Impact Of GST on IT Sector
Impact Of GST on IT Sector
Impact Of GST on IT sector – Do you know the impact of GST on the IT sector? Will GST affect the IT companies in positive or a negative way? If you are struggling to find the answer to these questions then we are here for you. GST is one of the newest trends which is spreading like the fire for the very obvious reasons. IT sector could prove to be most benefited once the GST come into practice.
GST is being introduced to simplify the business and tax system of the country. This major change in the tax system will allow for the greater transparency. IT sector had various issues with both the state and center government which are most likely to be removed with the implementation of GST.
How will goods, services, and tax affect the IT sector?
The GST regime was one of the most awaited regimes in the country. It is even considered as the biggest and the most beneficial taxation reform in India. GST will turn India into one common market for all the good reasons. It is expected to make it boost ease of doing business across sectors in the country. Below listed are some of the points that will throw a light on the impact of GST on the IT sector.
- GST will remove the multiple levies for IT companies and will also allow deeper penetration of digital services. However, several IT companies have more than one delivery center and offices working together to service a single contract. With GST, IT companies might require each center to generate a separate invoice to every contracting party.
- Duty on manufactured goods is expected to go up from existing 14-15% to 18%, which means the cost of electronics from mobile phones to laptops will rise.
- According to the Nasscom president GST may create multiple taxation points for the IT companies. He said, “We feel that today for IT services, it is a simple regime. One single point of taxation which is central service tax, one single point of registration, one single invoice, one single place where you have to go for any refund. Now under GST regime, it could be as high as 111 points because you have CGST (Central GST), IGST (Interstate GST) and SGST (State GST). We have 36 states and union territories. All put together, it becomes 111 different (taxation) points.”
- GST will help in creating a single and uniform market. Also, implementation of GST will result in the easier transportation of goods in every part of the country.
What will change in the IT sector after the implementation of GST?
As said before, IT sectors have had several disputes with the center and state tax system. This is definitely going to change after GST come into practice. Below mentioned are some of the other changes that IT sectors will go through after 1st July.
- There will be an end of classification disputes of software.
- The IT company will get more refunds on the export of the services.
- There will be huge business opportunities in India.
- Up to 90% provisional refunds.
GST is one of the major changes in the tax system that has ever taken place. Before GST, the tax system was a mess with a number of irrelevant taxes for various sectors. With the implementation of GST, the tax system is definitely going to improve. I hope this have been useful for you if you were looking for the impact of GST on the IT sector.
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