Vat, service tax and tds
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
09 August 2013
I have a company who will be purchasing a software developed by a ABC Co. by paying Rs.51 lacs. What will be provision of tax applicable. like TDS, Service tax & Sales tax.
What kind of tax laws applicable to ABC Co. Kindly provide the provisions.
What kind of tax laws applicable to ABC Co. Kindly provide the provisions.
10 August 2013
1)As per TATA CONSULTANCY SERVICES Vs State of andhrapradesh it is treated as sale of goods and will attracts VAT/CST
SERVICE TAX
2)Notification No 53/2010 ST dated 21.12.2010 has exempted service tax on retail sale of packaged computer software classifying the packaged software as goods and not service subject to certain conditions.
3)But the software sold electronically by the companies in the present discussion are not packaged software and hence the same should not be treated as goods at all.
4)When the software sold is not packaged software it should be subjected to service tax only.
5)It is important to observe that in case of software there will be “sale” of software only if source code and entire property in software is transferred to buyer.
6)But in the common parlance there is no sale of software as such as entire property in software is never passed on to buyer.
7) In such cases only right to use a software for a particular period is transferred and renewal fee is charged from the buyer.
8)It is clear that under the service head “IT Software Service” the service tax is to be levied on the fee charged for providing right to use a software.
SERVICE TAX
2)Notification No 53/2010 ST dated 21.12.2010 has exempted service tax on retail sale of packaged computer software classifying the packaged software as goods and not service subject to certain conditions.
3)But the software sold electronically by the companies in the present discussion are not packaged software and hence the same should not be treated as goods at all.
4)When the software sold is not packaged software it should be subjected to service tax only.
5)It is important to observe that in case of software there will be “sale” of software only if source code and entire property in software is transferred to buyer.
6)But in the common parlance there is no sale of software as such as entire property in software is never passed on to buyer.
7) In such cases only right to use a software for a particular period is transferred and renewal fee is charged from the buyer.
8)It is clear that under the service head “IT Software Service” the service tax is to be levied on the fee charged for providing right to use a software.
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10 August 2013
No TDS on purchase of software But please refer
CBDT Notification 21/2012 dated 13.06.2012
Better deduct TDS if service tax charged in bill
CBDT Notification 21/2012 dated 13.06.2012
Better deduct TDS if service tax charged in bill
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