The national IT Association pleads for 100% Input tax credit on declared inventory for applicable CGST irrespective of period of purchase.
Federation of AII India Information Technology Associations Aka FAIITA led by its office bears met Hon’ble Minister for communications & Information Technology, Govt. of India, Shri Ravi Shankar Prasad and apprised him about the concerns around GST.
Federation of AII India Information Technology Associations Aka FAIITA is a registered national umbrella body over all state IT federations/ associations representing direct business interests of its’ 30,000 (thirty thousand) pan India member-business organizations, pursuing business nearing Rs.20,000 Crores.
FAIITA members are primarily from SMB and MSME sector, spread across various geographies of the country and have diverse business portfolio ranging from Importers, Manufacturers, Regional Distributors, system Integrators and Retailers of IT products and services. Factually these 30,000 members are begetting direct and indirect employment to millions of skilled and unskilled manpower, and contribute substantially to the state exchequer through direct and indirect taxes.
AIok Gupta, Convener, FAIITA, said, “We welcome GST the Government of India initiative of “One India One Tax” and consequently in light of decision of Government of India to roll out country – wide, the new tax regime from July 01st 201’7 and thereto published Draft Rules and Gazette notifications for applicable TAX rates.”
Saket Kapur, General Secretary, FAIITA, maintained, “The IT industry in India has evolved over the years to usage of integrated functionality including but not limited to computing, scanning, Printing, Copying etc. Our members are largely registered with “service Tax and or VAT” to avail the respective input tax credit before levying the Output Tax on Services provided and Goods sold. The input credit available to our members is typically 5% (five percentage) on the cost of purchases and the same rate is applicable while selling the same.”
Understandably the opening input credit available to our members (Stage II and Stage III Dealers), on the inventories as on proposed date of roll out of the GST would be five percentage point of the purchase cost plus 60% of the applicable GGST i.e. of 9% or 14% depending on applicable GST slab of 10% or 28% respectively.
He added, “However, the GST to be levied on the same Goods when sold under the new regime is expectedly 18% (eighteen percentage point) or 28% (twenty-eight percentage point), leaving a difference of 7.6% (seven point six) and 13.4% (thirteen point four) percentage points respectively, to be either subsumed in the member margins or by increasing the sale price of the Goods. We are made to understand that practically trading inventories do not follow a purchase pattern based on time and at any point of time the trading stock of a Dealer comprises of purchases at various points of time. Hence allowing ex gratia input tax credit on purchase Invoices not later than 12 twelve months on GGST, is unfair, unjustified and unreasonable.”
Some of its members are left in a state of quandary as on one hand the trading margins are market determined and abysmally row to absorb the increased tax, while passing on the increased tax incidence on customers would increase the cost of Goods by 7.6% (seven point six) and 13.4% (thirteen point four) percentage points respectively, consequently leading to exceeding the MRP thus rendering them unsaleable.
Nonetheless there would be certain other members having availed input tax credit of 18% (eighteen) or 28% (twenty-eight) percentage points by way of fresh purchases under the GST regime, Consequently prepared to sell Same products 7.6% (seven point six) and 13.4% (thirteen point four) percentage points respectively cheaper than the peer members who are carrying stocks from the erstwhile regime.
In wake of foregoing submissions, the organization is requesting to allow 100% Input tax credit on declared inventory for applicable CGST irrespective of period of purchase.
