which tax applicable on design sale ?

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Yogesh (Querist)
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10 June 2009 dear all

We are saling one product. the prodct P.O. is open m which has not mentioned any specific date of closing order. they have issued seprate order of design & devolopent charges.we are issuing sale invoice against devolpment & design charges with include service tax.
is it correct?

Because of I heard excise duty will be applicable on devolpent / design charges & devolpent charges are dividing per quatity product & add excise duty in issuing prodcut invice, which has issued with excise.

kindly give the suggestion on same issue
. if excise applicable on devoplent charges, it is double taxation.

CA. Dashrath Maheshwari

CA. Dashrath Maheshwari (Expert)
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10 June 2009 Making design is not a manufacture as per the definition of Central Excise Act. Because, one design can be sold once only, you can not sale the same design, many times.
The design attract service tax under section 65 (105)(zzzzd)of the Chapter V of the Finance Act, 1994. which include designing of furniture, consumer products, industrial products, packages, logos, graphics, websites and corporate identity designing and production of three dimensional models.

Yogesh

Yogesh (Querist)
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11 June 2009 Thanks for reply, But our consultant says. if you are not making diffrent invoice , you will include devolpment charges in product sale. Then price will be incresing, so you are liable to pay excise duty on prodct sale which has include devolpent charges?

because of this you will made 2 separate invoice , excise dept. loss of duty, so you will liable to pay excise on devolpent charges ?

Asha Kanta Sharma online

Asha Kanta Sharma online

(Expert)
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03 August 2025 Here's a clear explanation on the tax treatment of design and development charges in your context:

1. Excise Duty on Design/Development Charges?
Designing is not manufacturing under Central Excise law.

Excise duty is applicable only on manufactured goods, not on design or development services.

Since a design itself is not a "manufactured product" but a service, excise duty does NOT apply on design/development charges separately invoiced.

2. Service Tax Applicability
Design and development services fall under the scope of service tax under the category of designing services (Section 65(105)(zzzzd) of Finance Act).

So, service tax should be charged on design/development charges.

3. If Design/Development Charges are Included in Product Invoice
If you include development charges in the product price (single invoice), excise duty will apply on the total value of the product (including development charges).

This means you pay excise on the entire value, including design charges (which might feel like double taxation if you also pay service tax separately).

To avoid this, the best practice is to raise two separate invoices:

One for the product (subject to excise duty).

Another for design/development charges (subject to service tax).

Summary
Scenario Tax Implication
Separate invoice for design/development Service tax applicable on design fees
Design/development charges included in product invoice Excise duty applicable on total product value (including design fees)

Recommendation
Issue separate invoices:

Product invoice with excise duty.

Design/development invoice with service tax.

This avoids paying excise duty on design charges and prevents double taxation.

CA. Dashrath Maheshwari

CA. Dashrath Maheshwari (Expert)
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03 August 2025 In today's scenario, GST is applicable together on design as well as product sale.
You may separate both things on the invoice and can charge applicable GST on product and service respectively.

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