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Double taxation on software sales

Sanjay Tiwari (Accountant) (62 Points)

13 July 2016

Dear Sir, I have purchas MS Office software, with local party. And they have provide bill with Service tax & VAT. its right or need to modified? ( service tax on basic value & VAT on basic+service tax )

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6 Replies

CA Harshal Totla (Chartered Accountant) (2229 Points)
Replied 13 July 2016

Since you have purchased a canned (packaged) software, hence only Sales tax/VAT shall be levied as canned software is 'goods'.

Shubham Gupta (Business Consultants) (2077 Points)
Replied 13 July 2016

only VAT should be levied

RAJKUMAR.S (inter) (23 Points)
Replied 11 September 2016

how to find out double taxation

RAJKUMAR.S (inter) (23 Points)
Replied 11 September 2016

overview of double taxation

Abhimanyu (CA) (316 Points)
Replied 11 September 2016

Thanks for the query,
It is a case of Disparity between union and state laws and as per both the laws it is taxable activity
Since it is sale it is liable to state VAT
and since it is also am activity for a consideration to one person to another not excluded from the def. 65B(44) or 66D or even the Notification 25/2012 and more over it is declared service in 66E which clearly states that such a software is not a sale of good but rather a service ie. allowance to use the software for a defined period of time over a licence to use and not a permanent right over such software which will be possible only if source code rights are transfered to the buyer.

Thus, in conclusion, the seller has to charge

Abhimanyu (CA) (316 Points)
Replied 11 September 2016

*charge both the taxes to comply with the present absurdity in laws of state and union, since GST is on its way presume no chances of change in current law uptil they are there, GST will certainly solve this problem, though it will bring much bigger and interesting ones with it.

Hope you have a reason for double taxation.
In case of any query please revert.
Thanks,
Abhimanyu