LIVE GST Certification Course by CA Arun Chhajer begins 27th April. Register Now!!

Service Tax Applicability

Shikha Sharma (Chartered Accountant) (311 Points)

19 August 2009

Hi Freinds,

I need a clarification regarding taxablity of information technology software services... I've read that, if the transaction involves sale of software, VAT is applicable and Service Tax is applicable on Software service.. What is the diff between sale of software and software service.

Thanks in advance

Reply
Follow
Share

7 Replies

shrikant (self ) (65 Points)
Replied 20 August 2009

providing services such as trouble shooting ,amc of software already installed etc. relaed to software, come under software service

while software in CD/DVD or in any form given for a consideration/price [ where property of that copy of software is transferred] becomes SALE OF GOODS

hope this answers ur query

Dr.Subhas ( Consultant) (22 Points)
Replied 26 August 2009

It will be appreciated if any on clarifies my fallowing doubts:

I have commercial rental income of 11lakhs and paying service tax for that, but this financial year I will have software consultancy serices of about 4 lakhs, I have doubt whether I have to charge service tax for my clients of software consultancy, since turnover under this head is less than 10 lakhs.

your clarification on this matter is much appreciated

Subhas

shrikant (self ) (65 Points)
Replied 26 August 2009

Hi,

u have to charge for addtional taxable service head from Rupee one itself since already u r paying ST on one taxable service head.

EXEMPTION LIMIT OF Rs. 10 lakh is the gross amount of all taxable services and all premises (if u provide more than one service and from more than one premise)

IF you wish u can refer to FAQ on cbec's website

jugal chandak (article) (48 Points)
Replied 26 August 2009

when service rendered tax rate was 12% but when payment received tax rate was 10%.......

so what would b rate applicable in ths case

Anil k (ABC) (36 Points)
Replied 27 August 2009

Hi please give me advice whether the a party providing taxable service to the extent of Rs.200000/- is liable to charge service tax if the already liable to pay excise duty (covered under excise & custom for rest of its business.

Satish (CA Final Student) (479 Points)
Replied 31 August 2009

Hi Jugal, The rate applicable would be 12%. The rate for charging purpose is always the rate existed on the date or period of performance of service. Receiving payment is only the event to crystalise the liability to pay. The rate does not itself get changed merely because you have received the payment too late. You can refer a Telephon bill for February 09 where you will find two rates.

Satish (CA Final Student) (479 Points)
Replied 31 August 2009

Dear Mr. Anil, Excise duty is covered by Central Excise & Salt Act, Whereas, Service tax is covered by Finance Act, 1994. Both are independent of each other and the exemption limits are also independent. Also filing of returns are also different from each other. So no need of paying service tax on 200000 of services where already paying excise duty. there is no connection.