Management News

Mixed Bag

The launch of GST from 1st of July 2017 is expected to herald a new era of simplified tax in the country. After its implementation in France in the fifties, over 150 countries have adopted the GST law in one form or the other. And its adoption will make India one unified common market. GST is essentially a tax only on value addition at each stage of production. Uniformity of tax rates and simplification of procedures will reduce compliance costs and phase out multiple central and local duties. And taxes should reduce the cost of locally manufactured goods and services and increase competitiveness in the international marketplace.

For the IT sector in the country, there are a number of implications which will come up as companies gear up to implement the new indirect tax regime.

Increase in compliance requirements
The IT sector, under its service contracts, has multiple locations where service is delivered under a single contract—be it domestic or exports. Service can be delivered either from one location or multiple locations, offshore and onsite services. This is the famous global delivery model applicable for IT service contracts, a worldwide norm...... Page 24 and 25