Is service tax chargeable on sale of self generated software
This query is : Resolved
26 January 2015
Company's main business is to develop and to provide service or directly sale of self generated software.
Is service tax chargeable, if the company sales self generated software amounting Rs. 1000000 ?
Is service tax chargeable, if the company sales self generated software amounting Rs. 1000000 ?
26 January 2015
Or whether VAT to be chargeable ?
26 January 2015
Depending upon the situation following would be applicable :
1. Onsite Development of Software – Liable to Service Tax
2. Advice, consultancy and assistance on matters relating to information technology software – Liable to Service tax
3. Where client specific software is developed for the client in such a way that the intellectual property developed belongs to the client/customer (just like a job-work) from the very beginning without the creator retaining any ownership rights over the same, the arrangement would be one of service and not sale of goods. The same has been confirmed under Sasken Communication Technologies Ltd Vs Joint Commissioner of Commercial Taxes,Bangalore (2011 (4) TMI 566 – Karnataka High Court)
4. Sale of License – Liable to Service tax if no transfer of right to use while liable for sales tax if transfer for right to use under deemed sale concept. Largely would depend on case to case basis.
5. Customised (Bespoke) Software Developed and Implemented:- Liable to both Sales tax and Service tax. In this context, one important ruling can be discussed here. The ruling is by foreign court i.e. in case of Levob Verzekeringen BV and OV Bank NV v. Secretary of State for Finance, Netherlands [2012] 22 taxmann.com 174 (ECJ) wherein it was held that Supply of basic software along with subsequent customisation thereof to meet requirements of customer and training to his employees under a single contract is a single indivisible supply of service and whole of the receipts are liable to service tax on Dominant nature test.
6. Manpower Supply :- Liable to Service tax
7. Updates and Upgrades: – To be treated status quo with implications in case of software.
8. Cloud Sharing :- Liable to Service tax
9. Online database Sharing :- Liable to Service tax
10. Value added services: – Liable to Service tax like subscription for pro-chat, premium services etc. If charges for transfer the same shall be liable to VAT.
Regards
1. Onsite Development of Software – Liable to Service Tax
2. Advice, consultancy and assistance on matters relating to information technology software – Liable to Service tax
3. Where client specific software is developed for the client in such a way that the intellectual property developed belongs to the client/customer (just like a job-work) from the very beginning without the creator retaining any ownership rights over the same, the arrangement would be one of service and not sale of goods. The same has been confirmed under Sasken Communication Technologies Ltd Vs Joint Commissioner of Commercial Taxes,Bangalore (2011 (4) TMI 566 – Karnataka High Court)
4. Sale of License – Liable to Service tax if no transfer of right to use while liable for sales tax if transfer for right to use under deemed sale concept. Largely would depend on case to case basis.
5. Customised (Bespoke) Software Developed and Implemented:- Liable to both Sales tax and Service tax. In this context, one important ruling can be discussed here. The ruling is by foreign court i.e. in case of Levob Verzekeringen BV and OV Bank NV v. Secretary of State for Finance, Netherlands [2012] 22 taxmann.com 174 (ECJ) wherein it was held that Supply of basic software along with subsequent customisation thereof to meet requirements of customer and training to his employees under a single contract is a single indivisible supply of service and whole of the receipts are liable to service tax on Dominant nature test.
6. Manpower Supply :- Liable to Service tax
7. Updates and Upgrades: – To be treated status quo with implications in case of software.
8. Cloud Sharing :- Liable to Service tax
9. Online database Sharing :- Liable to Service tax
10. Value added services: – Liable to Service tax like subscription for pro-chat, premium services etc. If charges for transfer the same shall be liable to VAT.
Regards
26 January 2015
Also if services provided by the entity exceeds Rs.10 Lakhs than service tax has to be paid.
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