Digital Industry Roots for Passage of GST in the Budget Session

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Industry body the Internet and Mobile Association of India (IAMAI) has urged the Parliament to pass the crucial GST Bill in the forthcoming budget session of Parliament. The industry body has said that the smooth passage of GST bill is crucial for the success of mega economic and social projects, especially Digital India and Start-up India. The GST bill, which subsumes all indirect taxes to create one rate and integrate the country into a single market, is the biggest tax reform that is being undertaken since Independence, but is pending approval of the Rajya Sabha.

The Digital India plan is about connecting, empowering and enabling citizens and encouraging local electronic manufacturing. Similarly, Start-Up India is focused on promoting entrepreneurship, and through small entrepreneurs, generating employment.

Local manufacturing, NoFN, e-Gov, as a part of Digital India, where private sector is involved, crucially rests on the successful passage of GST bill in Parliament, which seeks to create one market through one tax system. Similarly, start-ups, online market places, and other online service providers, all require a single market plan.

According to IAMAI, the extant tax structure of India is heavily fragmented, with multiple indirect taxes levied by different authorities at different stages of a transaction. Fiscal federalism has led to different procedures and rates of VAT and other forms of LBTs across the states. This creates logistical challenges for the industry, besides giving rise to compliance related complications. Conflict of interests between tax authorities in case of inter-state transaction is a major pain point for the industry today. GST will help the digital industry business model flourish by providing uniformity in tax rates and regulations across the country. This will help doing business in India easier, allow free-play to market dynamics and allow deeper penetration of these services.

Also, much of the developments in the digital industry are disruptive innovations. Business models like online platforms, aggregators, etc are essentially services provided by intermediaries. Such services are revolutionising the existing markets of both goods and services. Thus, online ticketing services or e-tailing are providing newer modes of access for consumers to existing goods and services.

The digital industry unequivocally stands for the smooth passage of GST and hopes that the bill will be passed in the upcoming budget session, as any further delay will push back the transformative projects of the government.

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“Thinking Aloud” reflects the emerging trends and varied outlook of the rapidly evolving internet and communication sector. An IAMAI publication, this is a part of the market education initiative of the association.


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