Conflicting rules thwart Digital India aim: Nasscom

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Nasscom, the information technology sector’s apex association, proposed on Thursday to form an empowered group to address policy issues impacting this and the e-commerce segments, such as the proposed goods and services tax (GST).

If this isn’t done, it said, the government’s entire Digital India programme would halt.
It has decided to write to the prime minister’s office, the finance ministry and department of information technology to set up this group, with stakeholders across sectors and the government.

Nasscom president R Chandrashekhar said though the objectives and priorities set out by the government are good, the various policies in different areas are not supporting the goal of Digital India.

“We find some of these policies are pulling in the opposite direction. There are things being attempted on the one hand and roadblocks coming up in other areas,” he told Business Standard.

GST, for instance. It was intended to make life simpler and make the whole regulatory environment easier. What has happened is that the opposite is going to take place for the services sector, particularly IT. “Whether it’s things like registration, compliance or filing of returns, it does not take into account the fact that if you are providing an IT service, you can provide it all across India. Today, you can do it with a single registration, whereas in the new framework, you will actually need as many as 100 registrations across all the states and then the returns will also be filed across different states and jurisdictions,” he said.

Chandrashekhar said in e-commerce, different states have been coming up with measures of taxation which end by imposing a higher tax on e-commerce, pulling the sector in the opposite direction of Digital India.

For instance, e-commerce entities are not allowed to offer discounts; physical stores may. Then, there are instances where a company has been taken to task for actions which have happened on the e-commerce platform when the company only acted as an intermediary.

For instance, the Nasscom president said, if you are a cab company physically and one of your drivers performs an act which is criminal, the driver is arrested and action is taken. But, if you happen to be doing it electronically, the platform provider and their office-bearers are held criminally accountable.

“All of these examples show inconsistency in the way the policy across the system is functioning, at cross-purposes with the objective of Digital India,” he added.

Stressing the need to form a suitably empowered group to identify these pain points and remove such blocks, he said if that is not done, the move towards Digital India will not happen smoothly or be actually halted.

Nasscom had also written in June 2014 to the government about the need to form such a group, while sending its Budget recommendations.

ISSUES HURTING THE IT & E-COMM SECTOR
In new GST framework, IT service providers need to register in all states whereas currently, a single registration is enough

E-commerce players are not allowed to offer discounts whereas there is no such restriction on physical stores

Different states are coming up with measures of taxation which end up imposing a higher tax on e-commerce

If issues not resolved, the move towards Digital India will not be smooth or may be halted