Applicability Service Tax on I.T.Software Services

If you are selling software then you are liable to pay VAT under the respective state act. If you are rendering a software service then you need to pay service tax on it.

Just check whether it is a sale or service.

In my view,

Service tax will be applicable only if it is a Software Service.

As per your statement, as it is already covered under VAT, again it will not fall under Service tax.

Hi,

Eventhough we are paying Local vat on Software, from 16th May 08, we have to pay additionaly service tax also for all software licences.

S.Vasudevan

Can you through some light on the applicability of  service tax on "Software Licences" being traded in the normal course of business in the line of new services "Information Technology Software Services " introduced by the finance bill 2008 and service tax is applicable with effect from 16.0.5.2008 vide notification no. 18/2008 -Service Tax Dated 10.05.2008.

Since the Software Licences are already covered in the VAT act under the I.T.Software and taxable @ 4% under Delhi local VAT .  Please also clarify the  whether it will be liable to  VAT also after the service tax notification.

Answer: the Information Technology Software Service is intending to cover the service starting from planning till the acquiring the right in the said information technology software. The scope of the service intended to be covered are specifically the following:

1. any service in relation to information technology software for use in the course or furtherance of business or commerce.

2. development of information technology software

3. study, analysis, design and programming of information technology software

4. adaptation, upgradation, enhancement, implementation and other similar services related to information technolgy software,

5. providing advice, consultancy and assistance on matters related to information technology software.

6. conducting feasible studies on implementation of a system, specifications for a database design, guidance and assistance during the startup phase of new system, specifications to secure a database, advice on proprietary information technology software,

7. acquiring the right to use information technology software for commercial exploitation including right to reproduce, dictribute and sell information technology software and right to use software componenets for the creation of and inclusion in other information technology services software products.

8. acquiring the right to use information techonlogy software supplied electrnically.

Taking note of the above mentioned,

We need to analyse the softwares as customised software or off the shelf software. If the software is off the shelf software then it is TCS case the same is treated as goods and hence service tax is not applicated. But customised software gets attracted.

Dear All,

Thanks a lot for your valauble inputs ................

Best Regards,

M P Singh

Is this deouble taxation of both VAT and Service Tax good in law?  Is this not unprecedental and can this not lead Government to applying dual taxes to many other products / services as well?

Biren Shah

Hi,

Since the rules as defined in the present notifiaction are very unclear. do we burden the customer with this added liability.

in our case we buy SAP licenses from a reseller of SAP. this then gets downlaoded to customer in that very format as was sold by SAP

After the same has been done we them may or may not provide consulting services on it.

the PO raised by the custiomer on us shows all chrages line by line as "licenses", "consulting" etc etc

in such a scenario now the reseller wants to charge this levy on us and we maintain that when we buy from you it is std software. only aftwer it is downlaoded to customer dioes its form be changed.

do we need to pay him this extra levy.

in case of online purchase of software licence from abroad do i need to pay service tax on that?

hi.. is it necessary to deduct TDS for a dual tax transaction.. if yes, how? under which sec.? kindly help me out in this regard.. Treat matter urgent
 

The impostion of ST on software in addtion to the VAT is clearly invalid in law. However the matter may have tobe determined by the courts. In the meantime the same shouldbe resisted and opposed where possible
 

Is Cenvat credit is available on CVD paid on Software Licences import for ERP servers which also help in production data analsys.?

CA Anoop Garg

anooplines @ yahoo.com