Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: Central Excise rule to resale the machines to a new company :: ACCOUNTING STANDARDS :: cpt :: due date for vat payment :: form 3cd :: ARTICLES ON INPUT TAX CREDIT IN VAT :: empanelment :: ACCOUNTING STANDARD :: TDS :: list of goods taxed at 4% :: TAX RATES - GOODS TAXABLE @ 4% :: articles on VAT and GST in India :: VAT RATES :: VAT Audit :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes
 
 
« News Headlines »
 How to file income-tax returns online
 How Income Tax Returns Are Scrutinised
 All About New Income Disclosure Scheme to make Demonetisation successful
 Your deposit may draw income tax notice
 Accepting payment under IDS 2016
 New disclosure scheme could see 50% tax and 4-year limit on cash use for unaccounted deposits
 Pay 50% tax on unaccounted deposits, or 85% if caught, says Modi government
 Deadline to pay property tax in old currency extended
 Cabinet clears amendments to Income Tax Act
 Have you got interest on your income tax refund?
 New income tax rules to curb unaccounted cash

Indian IT firms shrug aside EU tax concern
November, 17th 2009

Even as the Indian IT industry is studying the fine print of the European Union (EU) to expand the scope of value-added-tax (VAT) from January 1, to include services like back-office operations, call centre work and administrative services delivered from non-EU nations (including India), it does not appear to be unduly perturbed.

Europe, including the UK, contributes about 20-27 per cent of Indian IT companies revenue. For instance, Europe and the UK contribute close to 27 per cent (July-September quarter) of Indias largest IT services provider, Tata Consultancy Services (TCS), yet, it does not see any impact.

There is no impact on TCS, since clients of the European countries, where we have subsidiaries, were paying VAT on all onsite and offshore services. Hence, this new law will have no impact on our financials from this perspective, says S Mahalingam, chief financial officer, TCS.

He adds the main change is that VAT from next year will be charged at the point of delivery of services, instead of the point of origin of services. Hence, there is no additional tax, just the point of levying of the tax has changed.

It is not a new event. These kind of changes keep on happening and we are taking this up with clients and the regulatory body.

As of now, there is no major impact. Even if this (VAT) does get passed, most of the clients can take input credit for the applicable VAT against the VAT on their output, says Rostow Ravanan, chief financial officer, MindTree. Europe contributed 21 per cent to MindTrees revenue at the end of the second quarter of FY10.

Farid Kazani, group CFO and finance director of Mastek, which has close to 50 per cent of its revenue from the UK, concurs that the tax will not have an impact on the companys financials. This is applicable to certain verticals like banking, finance and insurance all the other will get offset.

Also, what this means is that some of the services that were not liable for taxes, like back-office operations, call centre work and administrative services, will come under the ambit of the tax. For Mastek, this does not mean anything. As our customers were anyway being charged and getting refunded for it, adds Kazani.

Nasscom President Som Mittal says: We are still getting into the details, but Indian firms will have a minimal impact because of this. It seems the tax is being used to promote standardisation and unification of vendors across EU.

Nasscom also maintains that the onus of remitting taxes for VAT will now be on the consumer of services through self-assessment after January 2010. A second point to note is that for the services rendered by the Indian IT-BPO industry to customers based in the EU member states, the VAT applicability differs from state to state.

With the new rules, most of the discrepancies will be harmonised. Thus, the changes are procedural in nature and the impact on the industry would be marginal. The harmonisation of rules will, in fact, improve procedural efficiency, a Nasscom statement said.

Analysts tracking the sector, too, feel it was still too early to talk about the legislation and there was room for clarifications. There are a couple of things that are not clear. One, whether this is applicable to both EU and non-EU firms? If it is only for non-EU firms, it is a discriminatory move.

Two, since this is part of direct tax regime, does it have a system of tax credit in place, as this will allow the vendor to recoup from client as it is VAT? And finally, any increase in direct tax is always paid by the end customer, says Siddharth Pai, managing director and partner, TPI India.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Binarysoft Technologies - Careers

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions