Is service tax applicable on packaged software ?

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Raj

Accounts

23 Points Posted on 15 October 2014

Dear Experts,

Please clarify the following queries.

A Company in India is an OEM (Manufacturer of Rebranded Version) of a foreing company's packaged software.

The foreign company uploads the packaged software to their web server. The Indian company downloads it and sells it as it is without any modification. Further, a license will be provided in the form of USB pen drive or by email which makes the software to run.

In this case,

1. Is there any ST applicable on the sale of such packaged software ? If yes, what is the rate ?

2. Is there any custom duty applicable on such downloads ? If yes, what would be the rate ? As the software is not passing through customs, how to pay such duty, if applicable ?

3. Is there any VAT/ CST applicable on the sale of such packaged software ? If yes, what is the rate ?

Thanks & Regards

Raj

Replies (2)

CA Prakash Rai

94 Points Posted on 15 October 2014

I am afraid I'll only be able to help with regards to application of Service Tax on this matter.
Since, the assessee is not modifying the software in any form and is merely selling it as it is to the customer, therefore, it saves the assessee from ambit of Section 66E (d) i.e., Declared Service of "development, design, programming, customisation, adaptation, upgradation, enhancement, implementation of information technology software".
However, the assessee is granting the licence to use to its customers hence, it falls under the ambit of Section 66E (c) i.e., Declared Service of "temporary transfer or permitting the use or enjoyment of any intellectual property right"

So, to conclude, yes; the service tax is applicable in this case as it is a Declared Service.