CAclubindia CCI
Login  Register
  • Professional Courses
    GST Microsoft Excel Tally Stock Market Accounts Others
  • Online Learning
  • INCOME TAX
    Articles News Forum Experts Files Notifications Judiciary
  • ACCOUNTANCY
    Articles News Forum Experts Files Notifications
  • LAW
    Articles News Forum Experts Files Notifications Judiciary
  • AUDIT
    Articles News Forum Experts Files Notifications Judiciary
  • GST
    Articles News Forum Experts Files Notifications Judiciary
  • STUDENTS
    Articles News Forum Experts Files Notifications Judiciary
  • Books
  • GST Plus
  • More
    • Articles
    • News
    • Experts
    • Files
    • Forum
    • Judiciary
    • Budget
    • Books
    • Events
    • Notifications
    • Jobs
  • Popular Courses
  • LIVE
  • GST
  • Tally
  • Excel
  • MS Office
  • Income Tax
  • Accounting
  • CA
  • CS
  • GST ITC Live Course
  • View More
  • Live
  • GST
  • Tally
  • Income Tax
  • CA
  • Excel
  • GST ITC Live Course
  • More Courses
  1. Home
  2. Forum
  3. GST
LIVE GST Certification Course by CA Arun Chhajer begins 26th May. Register Now!
Course 2023
Course 2023 Certificate in Quantitative Finance

how will GST impact it industry

Rupjyoti Gogoi

Rupjyoti Gogoi (267 Points)

23 May 2017  
how will GST impact it industry


Reply

Follow

Share

More
  •   Start a discussion
  •   Unanswered
  • Report Abuse

 1 Replies

Piyush Tanwar

Piyush Tanwar (Assistant Manager - Accounts)   (1332 Points)
Replied 23 May 2017

Tax Rate

The prevailing service tax rate on IT services is 15%. However, the recommended revenue neutral rate is at 15–15.5% and the standard rate is expected to be around 17–18%. Therefore, the cost of IT services will elevate, especially for end customers who do not usually claim the tax input credit.

Under our current tax structure, the sale of packaged software is entitled to both VAT (approximately 5%) and service tax (15%). The VAT on sales is directed to the state government whereas the service tax on service follows the central government. There are also cases where along with the VAT and service tax, excise duty is also applied due to lack of clarity from the government. However, it is expected that once the GST is implemented, the current average tax rate of around 25–35% shall come down to around 18–25%.

Cascading Effect of Taxes

The cascading effect of taxes will be effectively addressed under the GST regime. Traders, under GST, will be eligible to avail the credit of services such as in the case of AMC (Annual Maintenance Service) contracts. Currently, IT service providers can’t claim credits of quality including the assessment or deal charge spent on setting the IT infrastructure. Also, services charged by an IT service provider to a client who is a broker is an expense incurred for the IT service provider. Under GST, both the IT service providers and their clients will be eligible to claim full credit of GST. This is expected to eliminate the cascading effects of the present tax structure.

 

Business Process Change

Under GST, which is a destination-based tax, tax is collected by the state where the goods or services will be consumed. Most IT companies are registered only with the Central Service Tax authorities and usually all billing and accounting tasks are carried out from a central location. Under the GST regime, service providers are required to obtain registration for all the states that they are catering to, i.e. all states that they have customers in. This is to be done so that the SGST (State Goods and Service Tax) component of IGST (Integrated Goods and Services Tax) is rendered for respective states. IT service providers will therefore have to bifurcate their services and bill their customers based on location of consumption.

eCommerce Sphere

For eCommerce traders, the GST is expected to increase administrative costs. Also, since e-tailers have hundreds of sellers on their platforms, it significantly increases compliance burden. Small sellers will face cash-flow issues and will claim for refunds on the tax paid on inputs, which the eCommerce platform may not support. The tax collection at source (TCS) guideline under GST will increase the administration and documentation workload for eCommerce firms.

Compliance

The model GST law recognizes at least 111 points of taxation which means IT companies providing services all over India will have to seek registration in as many as 37 jurisdictions that will include 29 states, seven union territories and the Centre. This means that IT companies will have to register and file compliance reports at as many as 111 points.

 

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. Deskera ERP, being India’s first GST ready software, takes into account all applicable taxes that fall under the blanket of the Indian GST and can be readily plugged in to accommodate any upcoming tax requirements.

Online GST Certification Course

Leave a reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Previous Thread
Next Thread

Recent Topics


  • Regarding APMC Mandi tax applicability.
  • Why Post Offices not deducting TDS on Post Office
  • Trade name change 1
  • AIS portal not opening.
  • Disclosure in itr
  • How to calculate cost of shares of unlisted privat
  • Interest on late payment of TDS u/s 194q - calcula
  • Tax payment on summon
  • How to Download e-PAN Card?
  • RFD 01(Export with out payment of IGST)

More | Post

Related Threads


Loading

Popular Discussion


view more »


Start a New Discussion
Certificate in Quantitative Finance IIM Calcutta Applied Finance(Batch 17) Live GST Course on GST Input Tax Credit (ITC) by CA Bimal Jain

Trending Online Classes

GST Return practical and theory

CA Kapil Jain
Enroll Now

Live GST Course on GST Input Tax Credit (ITC)

CA Bimal Jain
Enroll Now

10 Day Workshop on Share Market for Beginners

Mukul Lamba
Enroll Now
view all classess

zoho
Follow us

Browse by Category


  • Income Tax
  • Audit
  • Students
  • Accounts
  • Custom
  • VAT
  • Career
  • Service Tax
  • Corporate Law
  • Info Technology
  • Excise
  • Shares & Stock
  • Exams
  • LAW
  • Professional Resource
  • Others
  • Taxpayers
  • GST




Subscribe to the latest topics :

Search Forum:

Forum Home
Popular Threads
Recent Posts
Unreplied Threads
Post New Topic
Settings

  • Articles
  • Forum
  • Career
  • Jobs
  • Judiciary
  • Income Tax
  • News
  • Experts
  • Budget
  • Feed
  • Top Members
  • Rewards
  • GST
  • Scorecard
  • Poll
  • Share Files
  • Bookmarks
  • Events
  • Trainee Corner
  • Notification
  • Tags
  • Books
  • CCI Online Learning
  • Group

Member Strength 38,64,130 and growing..

Stay updated with latest Posts!

Download CCI APP

CCI Android App 


Our Network Sites

lawyersclubindia GccFintax

Find Us On

  • twitter
  • facebook
  • instagram
  • linkedin
  • youtube
  • whatsapp
  • About
  • We are Hiring
  • Media Coverage
  • Advertise
  • Terms of Service
  • Disclaimer
  • Privacy Policy
  • Contact Us
© 2023 CAclubindia.com. India's largest network for Finance Professionals.

CCI Menu

  • CCI Online Learning
  • Enrolled Courses
  • GST Plus
  • Certification Course
  • Books

  • Articles
  • News & Updates
  • Forum
  • Share Files
  • Experts
  • Notifications & Circulars
  • Judiciary
  • Budget
  • GST
  • Income Tax
  • Accountancy
  • Corporate Law
  • Audit
  • Students
  • Jobs
  • Bookmarks
  • Feed
  • Featured
  • Top Members
  • Rewards
  • Scorecard

Login at CAclubindia

cciCAclubindia

India's largest network for
finance professionals



login
Forgot Password ?

Alternatively, you can log in using:

Login with Facebook
Login with Google

Don't have an account? Register Now

click here to register
CCI Online Learning
Site Search
Share
 Facebook
 Twitter
 Linkedin
 Reddit
 Email
 Whatsapp
 Gmail
 Google
 Pocket
 Print
 Pinterest
 PDF
 Translate
Whatsapp Groups
GST
Income Tax
CA Final
CA Inter
CAclubindia