“The GST Bill is good for the country, which will improve efficiencies, streamline taxation, transparency, as it is implemented on an IT platform. The single unified tax regime will create a rational tax regime,” President R Chandrashekhar said. “However, we have some concerns with the GST Model Law and not the Bill. We have a number of concerns with regard to the services sector in general and IT services in particular. And this is because IT services are intangible.”
“And the way things are looked at in the GST law, not the constitutional amendment Bill which is coming up today, but in the law which is going to come two months down the road, there we have a number of concerns which we have already shared with the government, where we feel that today for the IT services, there is a simple regime, one single point of taxation which is central service tax, and one single point of registration, one single in-voice, one single place where we have to go for a refund. So, all of these are under a single point,” he said.
“Now, under the GST regime, it could be as high as 111 points. Because you have CGST (central GST), IGST (inter-state GST) and SGST (state GST), and that multiplied by 36 is 108. And added to that is the central tax of 3%, which totals 111. So, moving from the single point to 111 could definitely prove to be a challenge in terms of ease of doing business. But we are not saying that these should be unified and the earlier regime retained. Accordingly, our suggestion is that the central taxes which are IGST and CGST, at least for that there should be a single unified point and the SGST will of course will remain with all the states,” Chandrashekhar said.
Nasscom has also suggested about companies doing self-declaration. “There has to be flexibility on the place of provision of the service, so let the company do a self-declaration, from where it is providing the services and what is the value. With these enabling provisions, we feel that the issues and challenges of the IT service providers can be hugely mitigated with zero impact on tax revenues,” he said.
“All that we are saying is, procedurally, don’t make it a nightmare. It should not become a negative from the point of view of ease of doing business. So it is important that as GST gets implemented, it should also be with one eye on maintaining the ease of doing business or at least making it easier but not difficult. Those are some of the challenges that we face,” he said.
On the growth of the industry, he said, “We do not see any reason to change the industry’s annual forecast. Currently, the growth is quite uniformly spread between verticals, geographies, service lines… We are seeing well-distributed growth. Further, the feedback from companies, as of now, is that they do not see any diminishing demand. So, there is no reduction in demand for the IT services,” he said.
“As of now, there is nothing to revisit guidance which Nasscom set at 10-12% growth. However, we may look at revisiting guidance in mid-year,” he said adding that IT companies are still upbeat about good revenues and prospects.
“There is a lot of pressure on margins due to overall global turbulence. There was a low level of growth in southern Europe and even negative growth in some parts of Europe, of just about 1%. There were uncertainties in the UK and Brexit led to hesitation in making big deals and aftermath of Brexit vote,” he said.
Source: The Financial Express