Impact of GST Bill on IT distributors’ business in India

By Shraddha Singh Aug 19th 2016
 Impact of GST Bill on IT distributors’ business in India

Here is what the IT distributors think about GST's impact on their businesses, OEMs and channel partners.

As the GST Bill gets approval from both upper and lower house, the IT distributors have already started gearing up to front the waves of change. Below are the reactions from IT distributors on the impact the bill will have on their businesses, OEMs and channel partners.

Ashok Kumar, CEO, RAH InfoTech:

The biggest benefit will be that multiple taxes like octroi, central sales tax, state sales tax, entry tax, license fees, turnover tax etc., will no longer be present and all that will be brought under the GST, encouraging business community further. Passage of GST will lead to consolidation of warehouses and increased efficiencies in the logistics chain. IT Hardware cost will come down if GST remains within 17-18% as proposed. But any increase in this number will adversely affect and will impact on cost. While in the long-run GST will have a positive impact on inflation and government finances, in the near-term, inflation is likely to go up and government finances are likely to be strained due to compensation to states. Since the rates have not been finalized we don’t know yet how will it change the dynamics on both end of business stakeholders-OEMs and channel partners. As of now we have multiple sales tax registrations for each state, but in coming days after GST implementation, we will keep one sales tax number based on our head office location and where we have online access to all documentations.

Read more: GST to catalyze economic reform in IT sector: Anwar Shirpurwala, MAIT

S. Sriram, CEO, iValue Infosolutions:

 We see GST delivering three benefits to all. First, there will be cost reduction to customer with lower effective tax rate. Second, enhanced compliance due to integration of goods & services taxes and third convenience due to better clarity on applicable taxes and its rates for all, if implemented the right way. Even though the rates have not got finalized, we are hopeful that GST model should lead to effective reduction of taxes at customer end ultimately. GST aims to reduce the cascading of taxes, which will lead to lower tax rates which should enhance affordability and increase demand for all. Changes in pricing and distributor policy can be made only after getting full-fledged information on tax rates.

Byju Pillai, CEO, Inflow Technologies:

 There is no immediate impact of the GST bill since we are waiting for more data to come from the centre. We still haven’t got the policy data. I think once we get a little more clarity, we will sit down with the big four like EY, KPMG etc., to understand the bill in detail and its implications on our business. Overall the GST coming in is a fantastic thing for the country because currently various state governments are regulating VAT for their respective states and GST will surely put an end to this. The whole confusion in the software VAT will also come to an end and we will need to have only one warehouse and not ten warehouses in ten different states. The GST will prove to be good for everybody- be it the OEMs or the channel partners. However some clarity is required on how the imports of the goods will be done, what will be the PPD value and how will one track the goods. In the future we will rearrange the ERP to ensure the provisions and pricing are taken care and from a distributor perspective we will also try to educate our channel partners in how to make the most the bill.  

 

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