National Association of Software and Services Companies (Nasscom) met the all powerful GST Council to raise issues concerning IT/ITES industry.
“This is one sector where we have beaten the world. Today the sector is facing challenges overseas including protectionism and anti-globalisation. While government support on global issues has been exemplary, it will be ironic if GST reform implementation is such that it throws up crippling operational challenges for the sector,” Nasscom President R Chandrashekhar told PTI.
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Nasscom highlighted the issue of de-centralized registration under GST. It said that under IT sector contracts are central but services are provided from multiple locations and are delivered within and outside India. This raises serious challenges with invoicing and input tax credit.
Complex place of supply, input credit and valuation requirements, in addition to multiple registration, is leading to an unviable situation, Nasscom said
“Our request is to allow for an option of single registration for the IT sector, without prejudice to the principles of dual control or apportionment of revenues between Centre and states.
“This is for companies that have pan India operations to enable centralised single point billing and to minimise multiple avoidable transactions for export contracts,” Nasscom has said.
Classification of Software
Classification of Software as goods or service has been an ambiguous. While original draft GST Law laid that ambiguity to rest, revised Model GST law has re-ignited the issue.
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“We thought that the debate over software being a service or a good was laid to rest, with the release of the initial model law, where intangibles were classified as services. Unfortunately this has been resurrected in the revised model law.”
It has recommended that software should be classified as services, as it is under the current service law. “This should be clearly articulated for electronic downloads,” it added.