Vat applicability

This query is : Resolved

Parminder Kaur Bhatia (Querist)
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16 July 2012 Hi,

Please suggest that VAT is applicable on the software development for mobile applications.

Thanks
Parminder

RENGARAJ R.K

RENGARAJ R.K (Expert)
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16 July 2012 Which state the query relates?

Parminder Kaur Bhatia

Parminder Kaur Bhatia (Querist)
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17 July 2012 This is for Andhra Pradesh

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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02 August 2025 For **Andhra Pradesh**, regarding VAT applicability on **software development for mobile applications**:

* **VAT is generally not applicable** on software development services because **VAT applies only to sale of goods**, not services.
* Software development is treated as a **service** under the service tax laws.
* Therefore, **Service Tax (now GST) applies**, not VAT.
* However, if the software is sold as a **packaged product** (like a CD or physical media), then VAT might apply on the sale of that physical product.
* But pure **software development, customization, or delivery electronically is considered a service** and falls under service tax/GST.

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**Summary:**

| Nature | VAT Applicability | Service Tax Applicability |
| --------------------------------- | ----------------- | ------------------------- |
| Software development (service) | No | Yes |
| Sale of physical software package | Yes | Yes |

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So, for your mobile app development, **VAT does not apply** in Andhra Pradesh — service tax or now GST would be the relevant tax.

If you want, I can help you with the latest GST provisions for software services as well!

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