Tuesday, 27 June 2017


The long awaited Goods and Service Tax or GST is scheduled to be launched on 1st July 2017. GST is an indirect tax that replaces different state and centre taxes. GST is a tax that is levied on manufacture, sale and consumption of goods and services at national level. Hence it is going to impact on various industries such as IT, Banking and Finance, Service, etc.
Let’s see how GST will have an impact on IT industries in India.
One of the most important factors that impact the success of GST is the strong IT backbone that connects all trade and industries, state governments, banks, other stakeholders, etc. on real-time basis. By eliminating multiplicity of taxes such as service tax, entry tax and VAT it simplifies the levy and valuation on composite transactions.
India is the biggest sourcing destination for IT industries as it provides various services such as Software Development, Mobile App Development, Web Designing and many more. These are one of the most important sectors that are likely going to be impacted. India accounts for approx. 67% of US $124,130 billion market in IT sector.
Tax Structure: Present
The sale of packaged software is entitled with VAT and Service tax. VAT rate is about 5% in the state and rate of Service tax is about 15% including Krishi Kalyan and Swachh Bharat cess. In the case of manufacturing of IT products, the excise duty is also applied.
Suppose if the software comes in Hard Disk/ CD then the taxes involved are -
·         Excise Duty (for manufacturing product) .
·         VAT and Sales Tax (for sale).
·         Service Tax (for providing service as software can be downloadable multiple times).

After GST
The assesses needs to register in each state for his business. All the service providers are registered under Central Service Tax Department and Billing, and utilization of credit is done from one location. All the offices need to register their location. There will be no difficulty for the firms having only one location. But MNCs will lead to difficulties if not taken care of this issue.
Tax rate may come as 18% to 20%, so it may lead to increase in tax portion under GST. Therefore the cost of IT Services will rise, especially for end customers who do not usually claim the input tax credit. Under current tax regime overall rate of indirect taxes is come under 20% to 25 %( including VAT, Service Tax, Excise duty), and GST rate may come under 18 to 20 %. Due to this, price of IT product may be cheaper but IT service is expansible.

Hence the MNCs incur more cost on infrastructure. But after GST cost of IT product may be cheaper. In just a matter of time we will all come to know the overall impact of GST on the IT industry. For now it’s time to sit back, relax and let the GST go in action.

Monday, 26 June 2017

Looking for dynamic youngsters who want to be an entrepreneur!

Looking for dynamic youngsters who want to be an entrepreneur!
We can help you start your own business with no investment!
Be an active contributor in the field of Information Technology!
No qualifications required to start this business
Only a passion to work hard and succeed!
And be our Domain and Hosting reseller in your own location
Call 9702837301 for any queries.

Featured post

Why India needs to update its currency design every 5 years

India is surrounded by unfriendly neighbours like Pakistan and China and also some friendly but be cautious friends like Bangladesh who are...