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Start-ups to face diverse impact in new GST regime: Experts

The introduction of the Goods and Services Tax comes as a mixed bag for start-ups as there is a varying impact of the new tax regime on each of the startups depending on the sectors they cater to. How

Published: 14th June 2017 12:53 AM  |   Last Updated: 14th June 2017 06:56 AM   |  A+A-

Express News Service

BENGALURU: The introduction of the Goods and Services Tax comes as a mixed bag for start-ups as there is a varying impact of the new tax regime on each of the startups depending on the sectors they cater to. However, the element of certainty that comes with GST will largely prove to be the biggest advantage for start-ups, removing scope for shadow expenses.

With the implementation of GST, start-up s need not worry about these expenses, burdening themselves with unplanned expenses, pointed out M N Vidyashankar, president, India Electronics Semiconductor Association. The number of ongoing litigations  with respect tax conflicts is humongous because it is subjective as of now.

With the implementation of GST, there is no scope for ambiguity and hence these litigations will come down, Vidyashankar said. “There are time limits prescribed for each action including refund. The industry will have a clear idea about the kind of rates to factor in for pricing.”

Start-ups in different service areas would also have to brace up for varying impacts. When it comes to online certification, a sector that is seeing rapid growth in the country, service tax should be exempted, opined Krishna Kumar, founder and CEO, Simplilearn.

“Online courses will be instrumental in catering to huge demand for jobs in newer domains. Service tax should be exempted on skill-based certification courses that has huge potential to enable lakhs of young, white-collared working population to up-skill and help India become a knowledge led economy.”   

Further, realty startups, which have to negotiate volatile market fluctuations on a daily basis, would even have to rework their market strategy.  

Sudeep Anandapuram of realty startup Zippserv, observed that they will have to rethink their focus areas once GST is implemented. GST rate of 12 percent will be applicable on under-construction properties, seeking to remove the inefficiencies of dual taxation in the form of value added taxation (VAT), service tax and puts an end to multiple taxes. Hence, startups need to turn their attention to the resale market and try to address the information asymmetry here,” he said.



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