My company has purchased a ERP system for300000 on which CST @ 2% with service tax @ 10.30% is charged, Besides this Vendor charged 60000 + 10.30% service tax as maintainance cost.
I want to know that whether service tax levied on the value of software is justified or not, and whether we have to deduct TDS on this amount.
You are liable to deduct TDS u/s 194C including Service Tax for Maintainence Cost charged by the Vendor .
Regards,
Devendra K
Service tax has been correctly levied as it is a taxable service. On TDS matter, there is lack of clarity. It is advisale to deduct tax from the gross amount inclusive of service tax.
The charging of both for a product is not justified. However to avoid demands and litgation companies have been paying both.
Decision in BSNL - SC - On Value of goods no service tax shouldbe charged and on value of service no VAT//. CST shouldbe charged.
You may see the recent decision under VAT of Sasken where the levy of only ST upheld as the property did not vest with the service provider.
Dear Mr Rahul
Pl give the break up of Rs. 300 000 , I think matter would be more clear then , as Mr Madhukar says that charging both is not justified , is right.
CAclubindia
