View from India: GST spawns market for mobile apps and tech services
The objective of India’s new Goods and Services Tax is to integrate the entire country into a single common market. Described as the biggest tax reform of Independent India, GST came into force on 1 July 2017. While it has gone through many tweaks and continues to be tweaked, GST has opened out new streams of revenue through a suite of mobile apps and tech-based services to help businesses deal with it.
India has become the one of the largest markets for e-commerce in the world, with a value expected to pass the $100bn mark by 2020. Under the erstwhile regime, value added tax (VAT) or central sales tax (CST), Service Tax, Entry Tax and Central Excise were applicable on e-commerce operators. GST has put things in a new light.
“When we look at the taxability of e-commerce, e-commerce operators have to register under GST irrespective of their turnover and pay tax on certain service categories as notified by the government,” says Jigar Doshi, a Partner at SKP Business Consulting LLP, a professional services group located in seven major cities across India. He was speaking at the GST- Post Implementation Issues national conference organised by ASSOCHAM India. The e-commerce operator should collect tax up to 2 per cent on the net value of taxable supplies made through their platform. By the 10th of the following month, e-commerce operators need to file a monthly return called GSTR 8.
Coming to suppliers, all suppliers on e-commerce platforms need to register under GST irrespective of any threshold limit. But then, a person who supplies goods or services through an e-commerce operator will not be eligible for registration under the composition scheme. Suppliers on e-commerce platforms are required to file periodical returns under GST.
PwC India has come up with a proprietary GST Compliance Solution, which is an end-to-end automation of GST compliances. It aims at automating month-end tax compliances and reporting and provides options for interfacing with multiple ERP (enterprise resource planning) environments. The solutions also offers seamless interface with Goods and Services Tax Network (GSTN), which is the backbone of GST. Earlier in the year, PwC India also launched its ‘GST with PwC’ app. Besides access to GST regulations, the app gives users insights, news and latest updates on GST.
A consumer tax filing company, H&R Block has been in existence in India since 2012. The company has launched earlyGST, which is a fully managed GST compliance service. In terms of technology, it has a GST-ready Invoicing Software and automatic categorisation of the mismatches to ease the process with real time dashboard for the key statistics. In terms of features, the service can create, customise track and send invoices.
“Besides simplifying the indirect tax structure, GST would also help to create 'One India'; by eliminating geographical fragmentation. It will remove the current cascading of taxes by ensuring the seamless flow of input credit across the value chain of both goods and services” explained Rohit Kumar Singh, head of operations for GSP business, Karvy Data Management Services Ltd.
GST had an equal feeling of hits and misses. “Small and individual businesses and liquidity or working capital management have been concern areas. The positive effect is that the tax reform provides a platform for Twitter interaction with clients, and is reactive to representations,” added Doshi.
Of course since GST has been implemented for just a few months it may be a bit too premature to fully judge its performance or provide a rating on its success or failure.