Service Tax for sale of readymade software ?

Queries 1670 views 2 replies

Prakash

Business

51 Points Posted on 24 October 2008

A client is based in Mumbai and imports Readymade Software from USA. They are charged CVD & Octroi. They sell these readymade software in India and charge VAT @ 4% (for local as well as outside Mumbai) to clients. To some buyers, they offer installation of the software FREE.

I wish to know:

- Are they liable to charge Service Tax from the customers here, although the software is readymade ? Also, if installationn is considered as service, even though it is offered FREE ? Are they still liable to charge Service Tax and if so, then at what rate ? If they charge Service Tax, then are their customers also liable to cut TDS from their payment ? And again, are they (importers) too liable to cut TDS from the supplier's payment made against import purchases ?

As per my knowledge, on sale of 'Tally', a readymade accounting software there is no 'Service Tax' charged and they also offer training, installation when you buy the software.

Waiting for expert opinions.

Best regards,

Prakash

Replies (2)

SIDDHARTHA SANKAR ROY

Government Servant -MOF

868 Points Posted on 19 November 2008

Originally posted by :Prakash
"	A client is based in Mumbai and imports Readymade Software from USA. They are charged CVD & Octroi. They sell these readymade software in India and charge VAT @ 4% (for local as well as outside Mumbai) to clients. To some buyers, they offer installation of the software FREE. I wish to know: - Are they liable to charge Service Tax from the customers here, although the software is readymade ? Also, if installationn is considered as service, even though it is offered FREE ? Are they still liable to charge Service Tax and if so, then at what rate ? If they charge Service Tax, then are their customers also liable to cut TDS from their payment ? And again, are they (importers) too liable to cut TDS from the supplier's payment made against import purchases ? As per my knowledge, on sale of 'Tally', a readymade accounting software there is no 'Service Tax' charged and they also offer training, installation when you buy the software. Waiting for expert opinions. Best regards, Prakash	"

They are not supposed to charge service tax from the customers as packaged software is considered as goods and attaracts central excise duty. However, maintenance of the same may attract service tax.

hardeep singh

Accountant

23 Points Posted on 07 November 2009

Originally posted by :Prakash
"	A client is based in Mumbai and imports Readymade Software from USA. They are charged CVD & Octroi. They sell these readymade software in India and charge VAT @ 4% (for local as well as outside Mumbai) to clients. To some buyers, they offer installation of the software FREE. I wish to know: - Are they liable to charge Service Tax from the customers here, although the software is readymade ? Also, if installationn is considered as service, even though it is offered FREE ? Are they still liable to charge Service Tax and if so, then at what rate ? If they charge Service Tax, then are their customers also liable to cut TDS from their payment ? And again, are they (importers) too liable to cut TDS from the supplier's payment made against import purchases ? As per my knowledge, on sale of 'Tally', a readymade accounting software there is no 'Service Tax' charged and they also offer training, installation when you buy the software. Waiting for expert opinions. Best regards, Prakash	"