Indian IT eyes crores of rupees in revenue as firms rush to get GST-ready

The Goods and Services Tax is slated to be rolled out from July 1

India's information technology (IT) industry is likely to benefit in a big way as the goods and services tax (GST) roll-out leads to companies spending a few thousand crores of rupees in becoming GST-ready. 

While many large businesses, with thousands of partners and customers spread across the country, are spending “significantly” to upgrade their IT infrastructure, the Union government will also invest in setting up the technology infrastructure for GST and its maintenance.

GST is slated to be rolled out from July 1 and will replace the existing tax compliance system for businesses.

“For the GST regime, businesses and organisations will have to upgrade the enterprise resource planning (ERP) and billing systems. It will be a very large and complex transformation and, therefore, it will create a huge opportunity for the IT services companies,” said Sanchit Vir Gogia, chief executive, Greyhound Research.

Gogia believes that it would not only bring in opportunities for technology services, but also for professional services to simplify the taxation and compliance processes for various organisations. In fact, technology services, professional services and necessary hardware upgradation put together, businesses may spend, Gogia added, few thousand crore rupees.

Infosys, India’s second largest IT services firm, bagged a five-year contract worth Rs 1,380 crore in 2015 to implement the GST Network — the nodal agency that will implement the technology and the IT backbone for the unified tax regime, along with the maintenance for it.  

“Companies such as Infosys, Wipro and other large IT services players will get some business from the government for maintenance of the GST infrastructure (too),” said V Balakrishnan, former Infosys board member and co-founder of fintech start-up billionloans.

For Indian IT services companies, technology system integration to comply with the new tax regime will be a separate project across Indian and multi-national companies.

“While large IT services players will get work from large businesses who are operating nationally with a large base of distributors, partners and customers. Typically this will be awarded as a separate GST-readiness-IT-project (encompassing design, development, deployment, support and training). Some of these projects are already underway,” said Malay Shah Senior Director, High Tech sector for Alvarez & Marsal India. 

"Many of the businesses in India may choose to work with their existing system integrators for technology transformation for GST," added Shah.

Start-ups, small and mid-size companies stand to benefit too in order to make small businesses ready for GST compliance.

“The peripheral work in terms of making it easy for the small businesses, I think, most of the start-up companies are playing a role and lot of business could flow towards them. A lot of start-ups are working on the reconciliation process (of invoices raised) for GST,” pointed out Balakrishnan.