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Service provider?

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Rak

21 Points Posted on 17 July 2012

An individual developer is developing software (content provider) and licensing to a company (software distributor) for distribution of software to consumers. Revenue is shared as 50-50% of actual revenue earned by distributer.

Both are India based.

Is service tax applicable?

Who is service provider in this case?

Is VAT applicable to content provider only or both the parties?

Thank you.

Replies (1)

Ajit kumar Dubey

Taxation Manager

797 Points Posted on 18 July 2012

If you are developing any customised software or a software that is to be sold on-line, then you are liable to service tax, provided that you have crossed the basic exemption limit of Rs 10lac taxable turnover. The agreement between you and the distributor are to be dealt separately with the actual sale of software. If the invoice is raised by the distributor to the final customer, then service tax liability, if any will be of the distributor only. VAT will be applicable on sale of software and the person in charge who has sold the goods will be entitled to discharge VAT liability. Hope you are clear on the same now.