GST Rates: Government disappoints IT community

As the Government introduces the biggest economic reform, some of the IT professionals are really disappointed with the spelled GST rates on items like printers, monitors, projectors, data cable and some other IT accessories.

No one really seems to know, but things don't look too good for the industry. Under the GST rate structuring, Government really needs to shed light on the confusion and need to answer those requests from vendors as well as from the IT dealers in the industry.

Commenting on the GST regime, Nitin Kunkolienker, President of MAIT expressed serious concerns and said, “The Finance Ministry immediately needs to clarify anomaly in tax slabs in printers, projector and monitors. All of these items along with IT accessories as Data cable collectively form important part of “Digital India” and they should be taxed at 18% to make Digital India successful.”

In the interaction, Nitin added, “We are trying to reach the government on this matter to have clarity on the rates as soon as possible as this is the major concern right now for MAIT as well as for the whole IT community”.

The focus should be to have most products at a standard rate (18%) and reliance on increased consumption, more manufacturing and economic activity. In talking to The DQ Week, Puneet Singhal, President, CMDA, Delhi said, “The IT Industry is not at all happy with the announced tariffs of the forthcoming GST wherein we had expected IT products to be in the 12% bracket and surprisingly our products are attracting 18% to 28% GST.

This is totally contrary to the assured digital or the IT related expected push /growth. Imagine basic products like the computers, printers and their cartridges seem to be in the 28% GST bracket which is going to adversely impact the education immensely besides the SME’s growth plans.

Also we will now have to acquire new accounting software’s which are GST compliant wherein the Government is not providing the same FOC to the already registered dealers which is necessary as GST is being imposed by the Government on us and we have already Invested once in the VAT related accounting Software.

Lastly there is no clarity regarding the input VAT credit of the existing stocks in hand which we will be carrying into the GST regime”.

On the other hand, after talking to the dealers in the industry, we tried to find out the opinions from some of the giant vendors of the industry.

Raj Kumar Rishi, Senior Director, Printing Systems, HP India says, “The implementation of the Goods and Services Taxes (GST) is a truly path-breaking reform for the businesses in the country and this is going to significantly boost the economy and aid growth. As per the current tax norms, the taxes on printers are close to 18%. However, there is ambiguity in the new tax slabs announced by GST council as printers figure both in 18% and 28% slabs. Hence, we request for clarification on the tax slabs and would urge the Government to keep the tax at 18% in line with the existing structure to continue with the digitization efforts”.

Amit Gujral , CMO LG Electronics, said, “Much awaited GST will principally create efficiencies, simplify taxation and create level playing field for manufacturers and traders.  LG is the leading brand and OEM of computer monitors in India .  Currently monitors, like computers and other IT products, attract total tax of about 16% excluding customs duty and therefore it was expected that they would attract GST rate of 18% like computers.

However, putting monitors in 28% slab has created a complicated duty inversion tariff structure whereby a computer (which includes monitor) shall be taxed at 18% while standalone monitor shall be taxed at 28%. It will become cheaper and hassle free for PC manufacturers to bundle a monitor & import at a lower tariff rather than buying India made monitors thereby discouraging the Make-in-India initiative of the government.

Moreover, where basic duty is applicable for relevant class of monitors (e.g. Medical Monitors) the total tax would be as high as 38% ( 10% Basic duty + 28% GST ) that would stifle the demand and may even encourage smuggling of these monitors. We request and urge the government to maintain parity with current tax structure and classify monitors fewer than 18% GST slab.”

As the nation is making a departure for GST implementation proposing the various rate structures, it feels the requirement of a serious rethink from the government’s side as per the opinions from the community.