Service Tax on sale of 'readymade' software

This query is : Open

Prakash (Querist)
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19 October 2008 I wish to know if an imported 'readymade' application software either in 'digital/non-physical' form or 'boxed' form from USA/UK, when sold in India, does 'Service Tax' need to be charged to the buyers ?

As I understand, 'Tally' is also a readymade application software and buyers of Tally are charged only VAT @ 4% and not Service Tax.

Awaiting expert opinions.

Thanks.

G. Prakash

Reetika Goel

Reetika Goel (Expert)
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22 October 2008 Hello Mr. Prakash,

Service Tax is leviable only if some service is provided to the other person whether they are of mechanical, technical, professional, medical or engineering nature.

As in your case, their is only selling of product which is intangible in nature, the provisions of Service Tax would not attract.

So, if any intangible good whether in digital form or packed in box is transfered VAT would be chargeable/payable.

Prakash

Prakash (Querist)
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24 October 2008 Dear Ms. Reetika,

Thank you for the quick response.

Only thing is that at the time of selling, many times client asks to install the software on their computer and give some guidance to operate. This is done BUT FREE OF COST. There is no extra charge levied for this.

To compare it again with Tally, they send their engineer to install and instruct, but they do not levy any service tax in the invoice.

So, if such facility/service is given to the customer FREE OF COST, is Service Tax leviable ? I hope not.

Awaiting your response.

Thanks.

Prakash

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