Impact of GST on IT Market: Here What IT Leaders Think

After Rajya Sabha cleared the long-pending Constitution Amendment Bill, the government on Thursday said it was hoping that at least 16 states ratify the legislation over the next 30 days for rolling out goods and services tax (GST) from April. "We are trying to reach the target date of April 1," revenue secretary Hasmukh Adhia said at a press conference.

While the Bill is headed back to Lok Sabha next week to get a clearance for the amendments that have been incorporated, the next step - formation of the crucial GST Council comprising states and the Centre - depends on ratification by the state legislatures.

A Constitution Amendment Bill needs to be cleared by two-thirds of the members of both Houses of Parliament and half the state legislatures - 16 states with two Union territories (Delhi and Puducherry). With some state assemblies having concluded their monsoon sessions, governments could look at convening special sessions.

While the rate of GST yet to be decided, here what Top IT Leaders think of GST Bill.

Betrand Yella, Managing Director, IBEE Hosting

"GST Bill is definitely one of the biggest tax reform in India and is expected to change the face of business in India. It is creating a common market place for all sector in India. There are few sectors which will be highly benefited but there are sectors which will suffer as well, specially unorganized sectors. For IT sector it is neutral as at one hand it will simply the procedures, reduces the multiple taxing structure and hence help in delivering our services to across India with same billing. Whereas on other hand it will increases the expenditures for us as we work on single contract for all centres but now with every centre there will be separate billing procedure to be followed, so need lots of documentations, manpower etc. So overall its a good move but will take time to get adapted in India Market."

Mahesh Jaising, Partner, BMR & Associates  

“The IT/ITeS and telecom industry has its own share of benefits and challenges under the GST – with more challenges than benefits, purely on account of the nature and manner of taxation of services under the present laws.

Presently, the IT industry is plagued with dual taxation in respect of supply of software electronically, AMC contracts, etc – this would get sorted out under GST . IT/ Telecom service providers were ineligible to avail VAT credits on purchase of goods used for provision of services and w ith seamless flow and fungibility of credit offered under GST, tax cost in the system will be reduced to a great extent.

Centralised billing and accounting for service transactions with respect to pan India contracts under the present regime ensured that taxation of services is simple and clear . However, with decentralised basis of taxation of services, the likely requirement of state-wise segregation of contracts/ billing may prove a huge challenge for the industry. GST may also prove to be a nightmare for service export er having pan India export units, especially in a case where the service providers are forced to apply for refunds in each state where such services are consumed .

The Government over last two years has been providing impetus to ‘Make in India’ and has provided concessions for making India as a manufacturing hub. Lucrative incentives such as lower rate of excise duty for mobile phones, tablets and Consumer premise equipment were offered . However, whether such incentives would be continued or not and if continued, the form and manner of continuing such incentives needs to be closely monitored. ”

Pavan Sondur, Chief Executive Officer, Unbxd

As the Chief Executive Officer, Pavan Sondur defines the road map for all technology and innovation at Unbxd. With a vision to be a leading Search as a Service player for eCommerce sites, Pavan founded Unbxd in the year 2010. Under his dynamic leadership Unbxd has developed a suite of products in the area of product recommendations through search, navigation and personalization. Pavan envisions taking Unbxd to the global business as an Indian startup and will be focusing on markets like North America.

Samay Kohli, Co- Founder and CEO, GreyOrange 

 “India’s indirect tax system has historically been complex. With Goods and Services Tax (GST) - a single tax head, India will now become 'one market' and the ease of doing business will improve immensely. Large Enterprises, SMEs & end consumers, everyone will benefit from a simplified tax regime.

The maximum impact of a GST rollout will be on the supply chain, as this will enable companies to finally optimize their supply chain networks based on scientific principals and logic, instead of disparate tax structures across the country which has been the case so far.

We look forward to partnering with enterprises in helping them realize the maximum benefits of large scale automated warehouses."

Rahul Aggarwal , Co-Founder, COO, Just Like New.

“With a million thing that a start up worries about, GST would make it one less. Taxes & accounting is an area probably many founders fuss about, seek expert help and still don’t get the correct structure. GST would definitely make the whole process much simpler.”

Rajeev Wadhwa, Group Chief Executive Officer and Chairman, Baron Aviation

"We need to see the impact of GST on services and trading businesses. Some of these businesses are very cost sensitive and even 10% difference due to added price can result in negative growth for the industry. Charter trading is one such sector that is likely to impacted by the GST bill, and not in a good way. BAOA needs to find ways to represent the industry and highlight its concerns to get some relief, otherwise we will have negative impact of this policy. We must also emphasis on positives - charter industry reflects the state of the economy, if inflation comes down and Indian businesses start performing better, it will bring in positive sentiment as a whole. Let us also check the impact on ground handling , airport charges and MRO to take holistic view of our industry.”

Atul Rai, Co-Founder and CEO of Staqu

"GST is overall good for economy as it will eliminate various complicated taxes between states and the Centre. Being a technology company, I don’t think it will have any direct impact as most technology companies in India are B2B. The major outcome of GST will be based on how it is impacting the corresponding business partners of that technology company. In general, it may add an extra burden to those tech companies which are having their pan India presence as they have to bifurcate services and bill the customer state-wise.

From a startup's point of view, I would say it will have a good cascading effect, as it will attract and encourage more investors from around the globe for Asia’s third largest economy with a clear and transparent tax regime."

Sriram S, CEO, iValue Infosolutions

"The passage of Goods and Services Tax (GST) Bill is a historic moment, paving way for the biggest reform in India. The unified tax structure will not only help boost the Indian economy, but also going to be fruitful in the industrial revolution and attract investments. India will become a single country with GST optimizing cost, compliance and convenience. The timeline for 1st April 2017 rollout looks challenging, but doable with political support."

Dr. Sumit D Chowdhury, Founder and CEO, Gaia Smart Cities

"Uniformity brought about by GST will help a startup work across the country easily and will help in scaling up the business. The Simplification of taxation will help reducing a lot of time that is spent in understanding taxation in the various states and almost having to pay someone full-time to maintain compliance. It is hoped that GST would provide a positive impact on growth and development of startups and the funding ecosystem. GST makes it unambiguous and clear and with the intent being taxation on consumption, we are hoping a lot of black money and corruption will be removed from the system. Uniformity of dispute resolution will make the government efficient. "