GST Rollout: Here's What IT-Telecom Experts Say

by Sohini Bagchi    Jul 03, 2017

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On July 1, India has moved to the Goods and Services Tax (GST) regime, putting an end to a regime of multiple taxes at various levels. Some taxes such as local administration tax will stay. What remains to be seen, however, is how the GST rates—from 5% to 28%—will affect various consumer-facing sectors of the Indian Economy. Here’s what experts from the IT and telecom companies who have been preparing for the goods and services tax rollout have to comment.
 
On the right path
 
Vinod Tambi, President & COO, Excellon Software, launched its Exact GSP Solution, a government mandated GST Suvidha provider, helps ensure GST compliance for enterprise businesses, said, “As this roll out was set to impact the central and state governments, consumers, small and big enterprises and service providers across sectors, there has been a lot of speculation about the implementation. However, in a complex and democratic country like India, an enormous task of this magnitude and reach has been, so far, executed with amazing nimbleness.”
 
The company’s  The Exact GSP solution is a cloud-based solution, hosted on Microsoft Azure and offers a one-stop GST automation and compliance platform with a comprehensive set of support services. Tambi added that Excellon, the tests have been successful so far and our software, ‘Exact’, is ready to handle millions of transaction as we have the experience of handling very large transactions already.
 
 
IT software company Ramco Systems, announced that its cloud ERP offering can seamlessly enable organizations to comply with GST regime. Virender Aggarwal, CEO, Ramco Systems, said, “Most businesses reach their end users through a value-add or distribution channel. In the GST-era, the ecosystem will benefit if every stakeholder is GST-compliant. Ramco ERP on Cloud is geared to address this statutory need holistically for a stakeholder with the ability to extend it across the value add network. With Ramco ERP on Cloud, customers will get the benefits of a comprehensive ERP solution coupled with the benefits of a scalable, flexible, and cost-effective cloud solution.”

For e-commerce players too, GST will help in the export process, but clarity on policy needed, believe experts, as the need of the hour for the government is to expand the categories for benefits under the export policy. Ecommerce platforms are facing a drastic change in accordance to taxation system. The need to provide flexible and powerful tax solution after the implementation of GST and StoreHippo facilitates this through its new move, aimed at simplifying GST for all involved,” said Rajiv Kumar, Founder, StoreHippo, an ecommerce platform that can be fully customized to accommodate the needs of ever changing business models, has undertaken an overhaul of its tax engine. With this, the platform can now take care of the GST calculations for their merchants.

Read more: How GST Will Impact The IT Industry

StoreHippo’s enhanced tax engine covers different components such as CGST, SGST and inter-state IGST, alongside marketplaces where various sellers and buyers come from different states. “Since we are at the very initial stage of GST implementation, marketplace sellers may not be fully aware of the new taxation rules. Hence, it is essential to plan a smooth and easy transition strategy for GST regime,” he said.

Telecom companies such as Bharti Airtel that has already made its system GST ready said, several teams across functions have been working on a war footing for the past few weeks to ensure that the GST registration process is complete and the company’s IT, billing and accounting systems are suitably rejigged to migrate to GST on schedule.

Airtel’s rival Reliance Jio too reportedly worked with service providers, vendors, distributors and all ecosystem partners to ensure smooth and easy data flow of GST using various input mechanisms, including the application program interface (API)-based seamless integration with accounting and billing software across functions.

The process required intensive training programmes, task forces, workshops and getting software ready, as Sunil Sayal, CFO-India market, Nokia, said the multitude of last-minute GST-related guidelines and clarifications coming in from the government side were throwing up implementation challenges for global network vendors like Nokia.

The challenges ahead

By blurring the lines between India’s 29 states, the GST should deliver efficiency gains to larger businesses. HSBC estimates the reform could add 0.4 percent to economic growth. Yet at the local chapter of the Indian Industries Association, which groups 6,500 smaller enterprises nationwide, the discussion is about how to cope in the aftermath of the GST rollout.

“In the initial months, there may be utter confusion,” said Arjuun Bajaj, Director Daiwa TV. “Many organizations face challenges as a new system is being implemented and are clueless as to the transitional gains and losses under GST. Hence they are forced to clear their stocks through discounts. At present, there is a lack of clarity on how the present excise exemption will work, post GST. In addition, there are going to be multiple costs associated with old stocks, compliances and increased cash flow requirements. Clarity is also required on differential duty on imports and local manufacturing to see the full impact of GST.”

Read more: 7 Attributes Of A Service Provider For Filing GST

Pitched in Ashish Shah, Founder & CEO, Vertoz and digitl advertising guru, “The current Service tax of over 15 per cent remains a cause of concern for the industry. With GST rollout, we hope that the Government eases the tax burden and reduces it which will in turn have an impetus and boost the advertising industry at large. GST is good for the economy in the long run, if the economy is healthy and growing, so will also be the advertising industry.  If the tax rate is revised adequately, the advertising industry will have a good run like it did in 2016, with a projected growth of over 15 per cent, making India one of the fastest growing advertising markets globally.”

On the positive side, the Government has allowed businesses a relaxation of time for the first two months (July-August) for filing their returns. Taxpayers would only need to submit a simple declaration initially, and would have time to furnish the exact “invoice-by-invoice data” in the month of September. With the extension to file returns till September, there should be enough time for those who are still readying their systems for seamless transactions to flow through their system. As Tambi stated, “GST is expected to significantly reduce the cost of transactions as well as tax compliance for a lot of sectors which in turn would bring a large chunk of the transactions on a digital framework and this will lead to ease of doing business in the long run.”

Implementation hurdles aside, the various sectors are expected to improve efficiency and increase their contribution to GDP going forward.