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Service tax on Software Devlopment

Santosh Nayak (Service) (39 Points)

28 January 2008

Hi All,

Wheather Service tax is applicable on Software Devlopment ?? if not then why it is exempt from Service tax.

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CA. Amit Daga (Finance Controller CA. CS. CFA. CIFRS. M.COM. ) (9017 Points)
Replied 28 January 2008

i) Service tax should not be applicable on computer software and IT services industry/professionals. ii) Payment towards licence fee for all kinds of computer software should be exempted from withholding tax through incorporation of suitable amendments in the 'explanation' of Section 9 of the Income Tax Act. In other words, no withholding tax need be deducted while making payment towards licence fees of computer software.