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: due date for vat payment :: ACCOUNTING STANDARDS :: TAX RATES - GOODS TAXABLE @ 4% :: empanelment :: VAT RATES :: form 3cd :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: articles on VAT and GST in India :: ARTICLES ON INPUT TAX CREDIT IN VAT :: Central Excise rule to resale the machines to a new company :: cpt :: VAT Audit :: TDS :: list of goods taxed at 4% :: ACCOUNTING STANDARD
« Service Tax »
 Benefits of GST to home buyers In the next lifetime
 GST: Jaitley says yes to cess, no to additional tax for compensating states
 GST to enhance ease of doing business, says Assocham
 Govt sources say cess is a better option than high tax rate
 Goods and Services Tax: There should not be more than three grades of rates, says Chidambaram
 Chidambaram says there cannot be multiple tax slabs in GST
 Service tax officials transferred for favouring realtor
 GST, a challenge and opportunity for accounting professionals’
 Service Tax On Hotels And Restaurants – Recent Delhi High Court Judgment
 GST Council discusses 4-tier tax rate, cess on demerit goods
 Why you shouldn’t miss these three simple tax saving options beyond Section 80C

Software firms confused over service tax
June, 18th 2008

Inclusion of a new services category--Information Technology Software Services-- within the ambit of Service Tax legislation has created confusion among the software firms in India. The levy of this new service along with other services has become effective from May 16, 2008.

Post the notification many feel that from May 16, 2008, packaged software will attract 12.36 per cent of service tax. So far, packaged software attracts Value Added Tax (VAT) of 4 per cent and 12 per cent of excise duty.

The confusion arises as the notification does not make a clear demarcation of whether software' is to be sold as a good and hence liable for sales tax (VAT) or considered as services' and liable for a service tax.

Packaged software are products that are sold off the shelf. Some of the products that would fall under this are from, Microsoft, Autodesk, Adobe and several security software packages for the computers. This will also include accounting software from Tally.

According to industry players service tax, payable to the central government, is applicable when a service is offered. While VAT is applicable when a product is sold.

Som Mittal, President, NASSCOM said: "Service tax, VAT, excise duty all are issues that have come up relatively recently in our sector and sometimes there may be possible anomalies in these. Since software is sold both as a product and service, it is liable to be subject to multiple interpretations, such as the case now. NASSCOM is continuously working towards solving such issues on an ongoing basis. We are in discussion with the various stakeholders on this issue as well and are looking at resolve it at the earliest."

Software providers, distributors, vendors and customers are all in a state of confusion and are waiting for some sort of clarification from the government. "The recent announcement has no clarity as to the implications. How can one ask for service tax on something that has been declared as goods? Besides there is no clarity whether VAT is to paid on service tax or the other way round," said a spokesperson of a leading distribution firm.

When contacted Microsoft, a spokesperson said: "The government has made its policy clear that it intends to subject all software to either service tax or excise duty. Certain aspects of the new service tax provisions are not very  clear with respect to their application to software products. We intend to work with industry organisations towards  getting a clarification from the government. Regarding impact on our distribution channel, service tax paid by both service and manufacturing sectors is generally available as an input credit, so cascading impact of the new levy should be limited."

Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Software Outsourcing Company Offshore Software Outsourcing Software Outsourcing Company India Offshore Outsourcing Company India Software BPO Software Business Process Outsourcing Software Outsourcing India Offsho

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