Posted On November 6, 2016 By In Business And 1007 Views

Multiple challenges for IT under GST

Hyderabad: Even as the country’s biggest tax reform, the Goods and Service Tax (GST), got its four-rate structure, it has not yet addressed the multiple challenges that the Indian information technology (IT) sector is worried about. Though the Indian IT industry, which is currently facing many headwinds, had been anticipating a rate of between 12 per cent and 16 per cent, the biggest challenge that it is facing now is, on how the GST would be applied to IT? Union Finance Minister Arun Jaitley on Thursday announced a four-tier GST tax structure of 5 per cent, 12 per cent, 18 per cent and 28 per cent, with lower rates for essential items and the highest for luxury, demerit and sin goods that would attract an additional cess. However, the whole issue is on IT companies having to register and file compliance reports at multiple jurisdictions. Currently, a majority of IT service providers have presence across multiple locations in the country with the preferred mode of service tax compliance being on a centralised basis from a single location. “How can the state governments, which have not at all dealt with services as it was a union government issue so far, henceforth (post the GST implementation) assess the place of supply and also valuation of the inventory when it is supplied from another location,” Nasscom President R Chandrashekhar was quoted as saying earlier. In the absence of a consensus on Friday, on who will gain control over GST assesses – the central government or the state governments – the IT sector is expected to get a reprieve once the Centre-states deadlock is cleared at the State Finance Ministers’ meeting scheduled to be held on November 24-25.


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