What is GST:
Goods and Services Tax (GST) is an indirect tax reform which aims to remove tax barriers between states and create a single market. In GST consumers should benefit in two ways.
First, All taxes will be collected at the point of consumption. So that there will be more transparency in taxation.
Second, once barriers between states are removed, consumers will not end up paying “tax on tax”.
Impact of GST on IT sector:
- Complex billing and invoicing requirements due to the supply and valuation provisions of the GST bill could complicate taxation for IT companies.
- Under GST regime there are three tax point: Central GST, inter GST and State GST .Multiplying three GST with 37 Jurisdiction take the total number of point of taxation to 111.This means IT companies will have to register and file compliance reports at as many as 111 points.
- IT units in special economic zones (SEZs) will lose some inherent advantages because there is no provision for upfront tax exemptions in the GST bill.
In the process of implementing GST through legislations, It should not become a negative from the point of view of ease of doing business, there is possibility that Government in improving ease of doing business and reduced tax related litigation in India. GST could also generate business for large and small IT companies as organizations across the country reconfigure their IT systems to adhere to the new tax regime.