How Does GST Impact Technology and E-Commerce in India
The government of India has finally passed the GST bill, also known as the Goods and Services Tax bill. This is considered a significant step in the reform of indirect taxation in India. While the rate of GST is undecided it should rain between 17 – 19%.
So what does GST mean and how does it affect the Tech and Commerce Sector?
For starters, companies and manufacturers will see big benefits from this taxation policy. Instead of paying taxes at multiple levels of government including State and Central, there will be one Tax allowing for companies to save from the existing cumulative 25-30% tax burden and reduce it to 17-18% a a single unified tax.
For consumers the Mobile Phone prices are likely to come down and will become the same across states. Smartphone and Electronics Manufacturers are also likely to pass this saving to customers.
For Smartphone and Electronics Manufacturers, GST will ease up doing business as the cost of several state warehouses and logistics would reduce significantly. On the flip side, Network companies like Airtel, Vodafone and Reliance will get affected with the high rate of GST and would eventually raise prices for their services.
For the Auto Sector, prices of consumer Automobiles are expected to drop by 8% across the board thanks to the implementation of GST. This should help consumers buy their favourite vehicles slightly easily.
E-Commerce companies will be able to freely deliver goods across the country and certain complaints of specific states not falling into the delivery zone would be eliminated. The rise in cost of tax to a proposed 18% would increase administration costs for E-Commerce players.
All in all the GST Bill is seen as a win not only for the Tax system, but, also for the industry and the consumer at the end. Which means that once GST is implemented a lot of the Nation will stand unified – on goods and services at the least.
The implementation of a unified GST in India, will be one of the most significant reforms introduced in recent times. It will certainly ease our cost burden of logistics and benefits of reduced taxation can be passed on to our end consumers.
Atul Jain COO LeEco
I hope the Government will implement this long pending reform by April 1, 2017. The Government’s idea of a single tax regime is crucial to improve ease of doing business in India and address the ambiguities of the current indirect tax landscape, proving beneficial for the economy, at large
Bhaskar Pramanik, Chairman, Microsoft India
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