Software import

This query is : Resolved

C.A. Deepak Kakkar (Querist)
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21 March 2012 Dear All

Please help on following query:

One of my client to start a business of software import from microsoft singapore in the form of online access with password key. After that software to be sold in india to end user.

Software selling to local end user will attract service tax as well as VAT/Sales Tax.

Now my question is will import of software attract service tax under reverse charge method ie.e import of services??

& what about import custom duty applicability on import of softwares?

Regards
Deepak Kakkar

RAMESH KUMAR VERMA

RAMESH KUMAR VERMA (Expert)
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21 March 2012 There is NO SERVICE offered to the client when the software is sold electronically/digitally. It is a mere BUY-n-SELL transaction like any other 'goods'.

please Read the link before query. :

https://www.caclubindia.com/forum/import-of-software-service-tax-issues-167292.asp

C.A. Deepak Kakkar

C.A. Deepak Kakkar (Querist)
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21 March 2012 Sir

This is for sure that on selling software to end user service tax as well as sale tax/VAT is payable.

My question is specifically related to import transaction, whether service tax will be paid under import of services rules?? if you can help out.

Also link u have written is not accessible.

Thanks
Deepak

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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25 July 2025 Hey Deepak, good detailed query! Here’s a breakdown on the tax implications related to import of software (especially via online access) and subsequent sale in India:

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### 1. **Import of software as “import of services” — Service Tax Reverse Charge**

* When software is imported in the form of **online access with password/key** (i.e., no physical goods are imported, but software service is availed), it is considered **Import of Services** under Service Tax law.

* **Reverse Charge Mechanism (RCM):** Under Service Tax (pre-GST regime), the recipient in India is liable to pay Service Tax on import of services under reverse charge basis.

* So, **yes, import of software via online access/password key attracts Service Tax under Reverse Charge**.

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### 2. **Import Custom Duty on Software**

* If software is imported **physically on media (CDs, DVDs, hardware devices)**, Customs Duty will be applicable on the customs value as per the tariff.

* If software is imported **digitally via online access or download**, **Customs Duty does not apply** as there is no physical import of goods.

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### 3. **Sale of software in India to end users**

* **Sale of software** (packaged or customized) attracts **Service Tax** under IT Software Services category.

* If software is supplied **in physical form (CD/DVD)**, **VAT or Sales Tax** will also apply as it’s considered a sale of goods.

* If software is supplied **electronically (download)**, only **Service Tax** (now GST) applies, not VAT.

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### **Summary Table**

| Transaction | Tax Implication |
| ------------------------------------ | --------------------------------------------------- |
| Import of software via online access | Service Tax under Reverse Charge by recipient (you) |
| Import of software on physical media | Customs Duty + Service Tax (if applicable) |
| Sale of software physically (CD/DVD) | Service Tax + VAT/Sales Tax |
| Sale of software electronically | Service Tax (now GST) only |

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### Important Notes:

* This is based on pre-GST law. Under GST, the rules differ and reverse charge on import of services continues with GST.

* Make sure to take **Service Tax registration** if liable to pay tax under reverse charge.

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If you want, I can help with latest GST implications on software import and supply. Would you like that?

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