Arun Jaitley’s ambitious GST turns a reality. With the implementation of the Goods and Service Tax in both the houses of the Parliament, the project has got mixed response from various walks of the life.
The GST, which will be implemented from April 1, 2017, is expected to impact the IT-BPM sector (and also other industries), which is currently valued at USD 143 billion (2015-16). The GST, once implemented, will supposedly bring all states and people of India under one tax regime and reduce time for calculating tax for different states and expedite movement of goods and services.
IT experts believe that the GST Bill will bring some ease of doing business and address various challenges in the current indirect tax landscape. Large enterprises are also going to benefit from the GST is numerous ways. While the rate of GST is yet to be decided, industry observers have assumed an 18 per cent rate recommended by a government panel in making their impact calculations. Even though, the GST Bill is for all the business units, it is the SMEs and MSMEs which are getting maximum mileage out of this. After years, India has achieved one of the biggest financial reforms post independence. Also, currently, Total tax on software is 15% service tax and 5.5% vat totaling about 21.24% on base rate. This will come down to 18% GST. Software is taxed twice as service tax and VAT. Now it will be single tax. We feel that GST will simplify compliance and will free up resources to concentrate on business expansion. Though, implementation will be done only after things are in place, companies need to start planning for future
Mentioning about the importance of the bill, BJP president Amit Shah has quoted it is a boon for the MSME sector. “He said GST is the biggest tax reform since Independence and had been a long standing demand of the micro, small and medium enterprises (MSME) and Modi has made it a reality.”, he twitted.
SME feeds large industries and the most labour-intensive sector and therefore they should be given simpler passage for doing business. The single tax structure of GST would be ideal platform for them.
Curb Price Differentiation:
The biggest challenge of channel partner in the form of unethical e-market place is likely to end. With common billing in the country, the retail sector is likely to have a push. Many E-Tailers who are accused of billing the customers below the market operating price will now have to maintain a price parity with the retailers. A fresh air will be breadth into as GST will substitute Central Excise Duty, Service tax, VAT, octroy etc. As cascading of tax will be eliminated by GST, prices will reduce and propel the GDP of India to new heights.