GST is being touted as one of the single biggest economic reform in India since liberalization and one that promises to change the way India does business. This is is Part 2 of a two part blog series discussing the challenges for corporations implanting the impending India’s Goods and Services Tax requirement. See Part 1 here.
Introduction of GST ushers in additional challenges particularly for corporations in specific industries:
Bank and financial services companies: as compared to current indirect tax regime, in GST determination of correct place of supply, taxability of self supplies, state-wise registrations, taxability of interest margins and security trading gains are some of the complex challenges.
IT companies: Non availability of tax exemption in SEZ unit, state-wise compliances, multiple points of taxation are some of the major concerns.
E-commerce companies: Tax collected at source (TCS) guidelines where payment made to supplier would be subject to TCS at the notified rate, point of taxation rules for goods etc. lays additional burden.
Another point to be considered is that while the proposed India Goods and Services Tax laws and rules are similar to GST regimes in other countries in many aspects, the India Goods and Services Tax law places an additional burden on registered businesses to routinely submit financial transaction data to GSTN and follow a reconciliation mechanism for GST filings.
Working with these requisites and challenges can be a daunting task for corporations doing business in India.
These are, for many corporations, difficulties to overcome through current process and IT infrastructure. A robust IT infrastructure and tax technology, which takes cognizance of these conditions and offers a simplified software solution, will definitely form the backbone of successful and effective GST implementation.