GST and its Impact on the IT Sector
GST is about to get implemented and it is one of the most promising taxation bills that will transform the course of the Indian economy. It would add a new chapter in the history of Indian economy. The amalgamation of the central taxes into that of state taxes will be a significant step towards accentuating the Indian economy. But first the question that arises any mind is what exactly GST is and what would be the effect of it on the economy?
GST- Goods Service Tax is consumption based tax levied on the supply of Goods and Services which means it would be levied and collected at each stage of sale or purchase of goods or services based on the input tax credit method. This method allows GST-registered businesses to claim tax credit to the value of GST they paid on purchase of goods or services as part of their normal commercial activity. Taxable goods and services are not distinguished from one another and are taxed at a single rate in a supply chain till the goods or services reach the consumer. Administrative responsibility would generally rest with a single authority to levy tax on goods and services. Exports would be considered as zero-rated supply and imports would be levied the same taxes as domestic goods and services adhering to the destination principle in addition to the Customs Duty which will not be subsumed in the GST.
Implementation process of GST can get a little bumpy at first. One of the drawbacks of GST will be the lack of digital education in the rural allies of India. And just like VAT, people would take years to learn about it and become particularly familiar with the ins and outs of the GST taxation system. Also the lengthy process of taxpaying will leave the traders in a total confusion. The traders and dealer will take time to habituate this hectic system of tax payment.
Also, if we leave the cons behind, the arrival of GST is a boon to the IT sector of the country. The more digital India gets the needs of IT products will rise, giving the sector a number of opportunities. Just like demonetization, it will also have a positive and progressive impact on the IT sector. The corruption in the system would remarkably come down and the consumers will be in profit. Also, it’s a good news and music to ears to the manufacturers; they will see a good amount to tax relaxation and will be able to save a ton with this latest tax system.
Though, the GST is said to bring reliefs to the Indian economy, yet the whole thing depends on the execution and administration of this tax system. The execution can make or break GST. We have seen things gone wrong with demonetization and hopefully the government is prepared for the ultimate bad haste it would bring in initially. The government should understand the dilemma of the Indian rural constituents who are not that technical established in their being and also they will catch lots of problems with all those paper works involved online. What so ever be the case the only thing that can prove the fact that GST can actually accentuate the Indian Economy is the execution and administration by the government itself.