GST would make life difficult for IT services: R Chandrashekar, Nasscom


In a freewheeling chat with ET journalists, Nasscom President R Chandrashekar and Chairman CP Gurnani spoke about a wide range of issues plaguing the IT services industry and new internet companies — including the Goods and Services Tax (GST) Bill in its current form, slow progress of flagship government tech projects.

What is Nasscom’s view of policy formulation and implementation in relation to the digital/internet space?
If we want the whole potential of Digital India to be realised, it is not about government investing in a few projects. Of course, it’s important, no doubt. Projects like the optical fibre network or broadband in a rural areas are the basic foundation. Beyond all of that also lies the need the need to understand what it takes to achieve Digital India. We have to constantly scan for roadblocks and how to remove the impediments. And there we have seen examples of inconsistency in approach. For example, at a macro level there is a push towards Digital India saying we need to move towards technology since it is going to make us more efficient, cost-effective and make lives better. And then, at the ground level, you say if you transact electronically you’ll be taxed more. If you transact efficiently across states, you’ll be either taxed more or it will be stopped. Or if you transact electronically the guy who’s providing the electronic transaction will be responsible for all the acts of omission and commission of everybody in the platform. These are things which betray the lack of deeper understanding of these issues. This is not something we are terribly worried about, but this is certainly a cause for concern because, all these laws are not implemented not by one or two experts. They are implemented by people across the length and breadth of the country. Of course, Goods and Services Tax is another thing. While we are all strongly supportive of GST there are some concerns we have. GST would make life difficult for people in information technology services. If the bill is passed in the same way it is currently envisaged (in the form of the model GST law) then people will be required to take as many as 100 different registrations, 100 different compliances. And if you thought that was mind-boggling, the more difficult part is that a transaction which has been happening seamlessly across the country will have to then be somehow disaggregated and mapped on to states.

If GST as it is now envisaged is bad for IT services, what is the way forward?
We have brought this to the notice of the government. I have written to the finance minister. We will meet him shortly. We have brought this to the notice of both the finance minister and the empowered committee of state finance ministers. Amit Mitra (the chairman of the committee) has conveyed his interest in discussing and understanding this issue better. As the legislative framework evolves, these issues will get the attention they warrant. What will be the final solution? That is something we can’t say at this moment.

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