Post GST pricing suggestion confuses IT partners
Goods and Services tax ( GST) is an important tax reform. It is like a trigger, which will be resulting in big business transformation for the IT industry.
Few days back, Srinagar was chosen as the venue for the GST Council meeting, where central and state Finance Ministers met to finalize GST rates. Following this, the government has indicated that to monitor prices of various items it may set up an anti- profiteering authority.
With greater efficiency in the supply of products, enhanced flow of tax credits, removal of border check posts, and changes in tax rates, prices of goods and services may come down. Finance Minister Arun Jaitley recently stated recently stated that the Council has classified several items under lower tax rates, when compared to the current system.
However, since some tax rates such as VAT currently vary across states, the real impact of GST rates on prices may become clear only after its roll-out. For example, at present VAT rates on smart phones range between 5-15% across states. Under GST they will be taxed at 12%. As a result, while phones may become marginally cheaper in some states, their prices may go up in some others.
In the whole process, the hardest hit are the small and medium IT businesses who lack both understanding and the resources to adopt GST tools readily but no doubt are trying their best to go with the flow and groom themselves on the same.
The DQ Week took the initiative and talked to the different IT associations’ executive members on the recent announcements of GST and took their reactions related to the same.
In the talking, Vipul Datta, Chairman, Infotech Software Dealers Association(ISODA) shared, ” We are still waiting for a very specific input on software, and software associated services. More clarity is required as of now. We are trying to reach government agencies and trying to gather more and more clarity on the same. The only concern is that we definitely see challenges initially(in the first 2-3 months of implementation) and the concern is implementation and consolidation, the government must have some provisions to be able to comfort the community”.
Sridhar Ramanna, President, Association of Information Technology (AIT) says, “There could be a short-term disruption in the computer retail and over all IT trade might take a hit due to increase in rates due to GST. The IT penetration will slow down due to cost escalation. The Governments Digital India program will also be effected, as IT infrastructure & Devices form the core of the project”.