Corporate & Industry

8 ways GST will affect IT and telecom sector

8 ways GST will affect IT and telecom sectorBCCL
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8 ways GST will affect IT and telecom sector
Text: TOI Tech

The much-awaited GST regime finally seems in the offing.

Hailed as the 'biggest taxation reform ever' in India, GST will turn India into one common market. It is expected to make it boost ease of doing business across sectors in the country.

Wonder what it means for the IT and telecom industry, here's what analysts and experts say.
May hurt Telecom tower companiesBCCL
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May hurt Telecom tower companies
According to analysts and industry experts, telecom tower companies could miss out on an over Rs 2,000 crore annual savings opportunity on their diesel bills with petro-products remaining outside the framework of the goods & services tax (GST) regime.

According to tax experts at EY India, the non-levy of GST on petroleum products like diesel could have a cascading tax impact for telecom tower companies, especially since the telecom sector is the second-biggest buyer of diesel after the railways.
Mobile tariffs may go upBCCL
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Mobile tariffs may go up
Call charges, data rates may go up if the tax rate in the GST regime exceeds 15%.
To increase administrative costs for e-commerce companiesBCCL
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To increase administrative costs for e-commerce companies
Experts believe that GST may increase administrative costs for e-commerce companies.

As the tax collection at source (TCS) guidelines in the GST regime will increase administration, documentation workload for e-commerce firms and push up costs.
Will allow free movement of goods across the country, thus helping e-commerce companiesBCCL
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Will allow free movement of goods across the country, thus helping e-commerce companies
GST will help create a single unified market across India and allow free movement and supply of goods in every part of the country.

It will also eliminate the cascading effect of taxes on customers which will bring efficiency in product costs.
May create over 100 taxation points for IT companiesBCCL
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May create over 100 taxation points for IT companies
According to Nasscom president R Chandrasekhar, GST may create multiple taxation points for IT companies.

He said, "We feel that today for IT services, it is a simple regime. One single point of taxation which is central service tax, one single point of registration, one single invoice, one single place where you have to go for any refund.

Now under GST regime, it could be as high as 111 points because you have CGST (Central GST), IGST (Interstate GST) and SGST (State GST). We have 36 states and union territories.

All put together, it becomes 111 different (taxation) points," he told reporters on the sidelines of a programme here."
Cost of laptops, mobiles may increaseBCCL
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Cost of laptops, mobiles may increase
Duty on manufactured goods is going to go up from existing 14-15% to 18%, which means the cost of electronics from mobile phones to laptops will rise.
Will eliminate multiple levies for IT companiesBCCL
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Will eliminate multiple levies for IT companies
GST will eliminate multiple levies for IT companies. It will also allow deeper penetration of digital services.

However, several IT companies have more than one delivery centre and offices working together to service a single contract.

With GST, companies might require each centre to generate a separate invoice to every contracting party.

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