Impact Of GST On India’s IT Sector

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What Is the GST on Software Services?

1. IT software’s design, development, customisation, enhancement, implementation, or up-gradation becomes a service supply. 2. As per new rules, such a service attracts a software GST rate of 18%. Any software in its physical form becomes goods as per the Customs Tariff Act. 3. The transfer of software IPR is also a service, attracting an 18% GST rate.

Is GST Applicable to the Export of Software Services?

1. Exports to SEZ units and developers have a zero rating under the GST regime. 2. This means such exports do not require any tax payment. 3. The exporter can avail of the input tax credit on all inputs used to create the exports. 4. Pay integrated tax for supplies, and receive a refund after exporting. 5. Export supplies as per a bond and claim refund on inputs and services related to that export.

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What is the Impact of GST on the Indian IT Sector?

1. The sale of packaged software was subject to VAT and service tax under the previous tax regime 2. Presently, the IT sector’s GST will be 18% on software services provided by software companies. 3. The availability of ITC will also help businesses lower their operational costs, improving profitability.

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