Businesses in the website sector prepare for the impact of India's Goods and Services Tax (GST) overhaul

Businesses in the website sector prepare for the impact of India's Goods and Services Tax (GST) overhaul

The Indian Government has approved the much-anticipated Goods and Services Tax (GST) 2.0, set to take effect on September 22. This reform promises profound changes in India's business landscape, and it's expected to have a significant impact on Vietnamese investors, producers, and exporters in the Indian market.

During an online seminar hosted by the Trade Office in India and KPMG India, Ridhima Mehta, a tax expert at KPMG India, highlighted that GST 2.0 aims to simplify tax structures, adjust rates, and modernize administrative procedures.

Under GST 2.0, the multi-tier tax system will be simplified to two main rates of 5 per cent and 18 per cent. This simplification is expected to reduce disputes and provide greater transparency and stability.

More than 200 essential items, including electronics, automobiles, medical equipment, footwear, and household goods, will benefit from tax cuts under the new regime. Sectors like healthcare, education, textiles, agriculture, electronics, and essential consumer goods are expected to gain from the new tax regime.

However, sectors like footwear, farm produce, and aquatic products may face stronger competition due to India's temporary refund scheme and domestic consumer goods incentives. Key export items such as steel, textiles, and plastic products, on the other hand, are expected to gain from the new tax regime.

Coal and other polluting energy sources will face higher taxes under GST 2.0 to promote clean energy. This move is expected to help lower costs and boost competitiveness for Vietnamese businesses.

Digitalized registration, filing, and refund processes under GST 2.0 are designed to ease compliance for small businesses, start-ups, and exporters. Firms are advised to adjust management systems, update ERP software, review contracts, manage inventory carefully, and devise appropriate pricing strategies to maximize benefits under GST 2.0.

The seminar aimed to help Vietnamese companies understand key policy changes and prepare response strategies. Buì Trung Thuông, the Vietnamese Trade Counsellor in India, opened the event, and the name of the person serving as Trade Counselor in India who explained the effects and implications of India's tax policy changes for Vietnamese companies during the seminar remains undisclosed.

Between January and July 2025, Vietnam's exports to India reached US$5.94 billion, up 10.7% year-on-year, maintaining a trade surplus. With GST 2.0, this trend is expected to continue, as life and health insurance will be fully exempt from the new tax regime, potentially creating momentum for India's insurance market.

In conclusion, GST 2.0 is a significant step forward in India's efforts to modernize its tax system and boost competitiveness. Vietnamese businesses are encouraged to stay informed and prepare for the changes to take full advantage of the opportunities that GST 2.0 presents.

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