-Channel Times Bureau

Mumbai: The Goods and Services Tax (GST) is one of the most discussed topics among channel partners. Touted as the biggest tax reform in the country, the new indirect tax regime will become a reality on 1st April 2017.


The final roll out of the GST bill will have a significant impact on every industry including IT distribution business. In this regard, Mumbai based Trade Association of Information Technology (TAIT) recently organized a workshop for its members to appraise them on the impact of GST on the electronics products, solutions and services.

Rajeev G. Varaiya, Partner at Damania & Varaiya, briefed TAIT members on the various nuances related to GST. He spoke about the present taxation structure in India, global adoption of GST, India’s Model GST Law, GST compliance and reporting norms, taxes to be subsumed into GST and exclusions from GST.

Talking about the benefits of GST and its positive impact on the IT industry Rajeev G said, “The GST bill is expected to simplify indirect taxation, roll out single and uniform GST rates across the country, with a transparent tax structure. It will create a seamless tax credit mechanism across the business value chain.

IT service providers will be able to set-off input GST on the purchase of goods required to set up IT infrastructure, against their output liabilities, even as the cascading effect of multiple taxes decreases.”

However, he did caution members that the overall cost of taxation may rise if CGST, SGST and IGST rates are fixed at relatively higher levels.

Also Read: GST Amendments Evoke Positive Reactions From IT Channel

Currently, total tax on software is 15 percent Service Tax and 5.5 percent VAT, adding up to 21.24 percent on base price. Software is taxed twice by means of Service Tax and VAT, but with the implementation of GST, this will be reduced to a single tax. TIAT hopes that the new tax regime will bring ease of doing business. However, the association demands that the tax rate should not exceed 18 percent.

“As an industry body, we really hope that in the new GST regime the rate will be revenue neutral and not exceed 18 percent”, said Rushabh Shah, President, TAIT.