The GST regime slated to be rolled out from April 1, 2017, should ensure that issues like complex billing and invoicing requirements and reverse charge on import of services do not impact the export competitiveness of the $110 billion sector, industry body Nasscom said on Thursday.
Nasscom, which represents IT firms like TCS, Infosys, Cognizant as well as e-commerce companies like Flipkart and Snapdeal, lauded the passage of GST Bill saying the new regime will streamline the taxation system, making it more transparent.
“The GST bill will have positive impact as it subsumes multiple levies, clarifies taxation of electronic downloads and is widely expected to accelerate overall growth of GDP in the country with spinoff benefits for all sector including IT-BPM,” it said.
However, companies engaged in the supply of services on a pan-India basis will have to seek registrations in 37 jurisdictions, that is, 29 states, seven union territories with legislature and Central Government, it added.
Export competitiveness of the IT sector could be impacted due to complex billing and invoicing requirements due to place of supply and valuation.
“Another issue that needs to be addressed is the reverse charge of GST on import of services, used as inputs for services that are exported...This can lead to locking in working capital,” it said.
Explaining the concept of a reverse charge, Saloni Roy, the Senior Director at Deloitte, said that export-oriented companies pay service tax for import of services (say ERP licence or management consultancy fees), and although the same can be claimed as refund, it involves delays.