Nasscom concerned over GST implementation

Software lobby group National Association of Software and Services Companies (Nasscom) said it was yet to get clarity on the rates for IT products but cautioned that the bigger challenge for the sector would be the implementation of the goods and services tax.

“The industry is looking at a rate of 12-16 per cent. So, it entirely depends on how it gets. But, the bigger concern is how the GST is applied,” said R Chandrashekhar, president of Nasscom.

Finance Minister Arun Jaitley on Thursday announced the four slabs – 5 per cent, 12 per cent, 18 per cent and 28 per cent – for GST rates.

The software industry was also concerned about the need to register in multiple jurisdictions.

“Many state governments have not dealt with services as it was so far a central subject. How will they assess place of supply and also valuation of the inventory when it is supplied from another office?” said Chandrashekhar. “The tax rates are less of a concern. GST should also not make ease of business more complex with the whole process.”

He also was concerned about credit for taxes as the industry was predominantly focused on exporting software. Stating that software is ‘intangible’, which can be used and transferred between offices, Chandrashekhar asked how would authorities count the place of supply, if it originates from another office.

E-commerce firms have warned that the benefit of scale and efficiency the sector offers could be negated due to the multiple registrations that might be needed to comply with the GST.

Flipkart and Amazon declined to comment on Thursday's GST rates.

National Association of Software & Service Companies (NASSCOM)