The service tax rate on IT services is currently 15%. The commended standard rate is estimated to be about 17–18% and the revenue neutral rate is at 15–15.5% . As a result, IT service costs will lift up, chiefly for end consumers who do not allege the tax input credit. The packaged software as per the current tax structure is permitted to both VAT (approximately 5%) directed to the state government and service tax (15%) follows the central government. Due to the lack of clarity from the government, at times excise duty is also applied. Nonetheless, once the GST is implemented it is anticipated that, the existing average tax rate of around 25–35% shall come down to around 18–25%.
Surging Effect of Taxes
The new GST rule addresses the surging effect of taxes efficiently. As per GST, both the IT service providers and their clients will be eligible to claim full credit of GST. This is predicted to abolish the streaming effects of the current tax framework.
Business Process Change
As per the GST regime, IT service providers will have to branch off their services and invoice their clientele’s based on location. It is mandatory that the service providers attain registration for all the states they have clients in since the SGST (State Goods and Service Tax) component and IGST (Integrated Goods and Services Tax) is provided for respective states.
The new GST regime appreciates IT services providers all over India to seek registration in as many as 37 jurisdictions and to register and file compliance reports at as many as 111 points.
For e-Commerce firms, the GST is expected to considerably increase administrative costs and compliance burden. Under GST the TCS (tax collection at source) guideline will enhance the administration and documentation workload.
http://veniteck.com/wp-content/uploads/2017/10/blog-2.jpg300300veniteck_adminhttp://veniteck.com/wp-content/uploads/2017/10/logo-for-web-01-3.pngveniteck_admin2017-10-11 12:09:242017-10-16 06:07:36GST- WAYS OF IMPACT ON THE IT SECTOR
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