Tax implications on customized software

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Sunilkumar.P.R.

Sunilkumar.P.R. (Querist)
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22 May 2012 Sirs,

Could any body advice me the tax implications (VAT/CST, Service Tax, Excise duty and TDS implications on the sale of customized software. Our contract normally includes charges for Developmnent/customization,License, Training, and Implementation. AMC is charged after a given period of time

chaitanya cherukuri

chaitanya cherukuri (Expert)
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22 May 2012 If your software is only customized software only service tax is applicable.

Arun Gulati

Arun Gulati (Expert)
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23 May 2012 In your Industry,you enter two types of agreement: one is customization agreement, wherein software is developed according to needs of the client and other one is maintenance agreement of same software. In my view both activities are taxable for development of software, you are liable to pay service tax under 'information technology services' under section 65(105)(zzzze) and for amc under 65(105)(zzg).

Arun Gulati

Arun Gulati (Expert)
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23 May 2012 yes Ms. chaitanya is right only customized software is subject to service tax. However, even packed software or canned software are also exempt from excise duty when you are paying service tax on these softwares. read Notification No. 22/2009-CE

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