With Rajya Sabha passing the GST Bill for the very first time, this could be the biggest tax reform of India since independence. While various tech giants are welcoming the new GST, its effect on the tech world is still not clear.
Basically, with the introduction of GST, India will now opt for single unified tax system. It will do away with majority of indirect taxes such as excise duties, VAT, octroi etc. As of the now, the proposed GST is believed to be less than 18%. Currently, it is believed that while GST will reduce prices of many goods, it will lead to hike in service taxes and hence it will directly impact mobile call rates.
Supporting the Bill, Rajan S Mathews, director general, COAI said, “The industry welcomes and celebrates this iconic reform, while urging the government to ensure that the rate applied for the telecom services should be no more than the existing 15% to meet the government’s vision of a connected digital India and ensuring affordable services.”
“This paradigm shift in India’s indirect tax regime must play an enabling role in the growth of key sectors like telecommunications. There are certain aspects relevant for the telecom sector that would need to be considered by the policy makers while finalising the GST legislation. We look forward to our continued engagement with the committee and working with them to make the implementation seamless, transformation meaningful and optimal,” he added.
Bhaskar Pramanik, chairman, Microsoft India, opined, “If the current indirect taxes are less than the proposed GST, then it will raise up the prices of goods like smartphones, tablets, laptops etc.. However, in the long run, it will eventually start benefitting the common man with reduction and levying out various taxes on such goods. Additionally, it will smoothen up the movement of goods across the country as well as beyond country borders.”
Nevertheless, GST will speed up interstate movement of goods and thus will boost e-commerce activities. Currently, the Bill is pending with the Lok Sabha after whose consent it will have to be ratified by state governments. It is a long way to go now and skeptics say that it may even miss next April target. Thus we will have to wait a bit longer for the finer details to emerge after which its effect on telecom and IT products will be clearer.