IT, ITes, electronics industries welcome GST reforms strengthening exports

Nasscom and the electronics manufacturing industry have welcomed the GST reforms, highlighting the positive impact on exports, ease of doing business, and future opportunities for digital inclusion

The reforms in Goods and Services Tax (GST) will bolster India’s tech industry export engine while reinforcing the momentum toward greater ease of doing business, industry body Nasscom said.

 

"Nasscom will continue to engage on the broader reform agenda across taxation, SEZ operations, and labour frameworks, including addressing distortions in the treatment of the onsite branch model for exports, to further enhance India’s global competitiveness," the industry body said in a statement.

 

Earlier this week, on Wednesday night, the government announced a host of reforms to the indirect taxation regime, which included rate rationalisation for most products to a simpler structure of 5% and 18%, while also announcing a tax rate of 40% on some luxury items and sin goods.

 

Apart from this, the government also announced changes to the taxation structure and provided clarification on issues such as omitting section 13(8)(b) of the Integrated Goods and Services Tax Act so that the place of supply for intermediary services follows the customer’s location.

 

This, Nasscom said, will restore export status and refund eligibility for services delivered from India and aligns the regime with international practice, removing the misclassification risk. 

 

"This has been a major issue for disputes, litigation, and denial of refund of input credit for our industry, especially IT-enabled services," Nasscom said.

 

Further, the GST Council's clarification allowing value reductions through credit notes with matching input tax credit adjustments, together with guidance on promotional schemes, will bring predictability for supply chains, the IT industry body said.

 

In the electronics manufacturing space, the rationalisation of GST on consumer electronics and appliances will stimulate domestic demand, expand the India Value Chain, and create scale efficiencies that enhance export competitiveness, Josh Foulger, the president of Electronics at Zetwerk, told Business Standard.

 

"For manufacturers, the simplified tax structure—which reduces compliance complexities, ensures predictability, and provisions for improved refund flows—is a critical enabler for integrating more deeply into global supply networks," Foulger said.

 

The electronics manufacturing industry remains hopeful that the rationalisation of GST on smartphones and laptops from the current 18% to 5% will be considered in the future, given its potential to improve affordability and strengthen digital inclusion, India Cellular and Electronics Association (ICEA) chairman Pankaj Mohindroo said.

 

The government’s decision to cut the GST rates on air conditioners and televisions from the current 28% to 18% will make durables significantly more affordable, Ashok Chandak, the president of the Electronics and Semiconductor Association (IESA) and SEMI India, said.