tax levied on softwares?????

 software is quite an interesting thing...

I am still unable to get all the details for you

however, some one told me that, softwares provided for a specific person i.e. coustomised softwares such as finacle used in banks provided by infosys will be charged under service tax.

& some packaged products such as Tally, windows etc shall be covered under VAT act.

Please somebody confirm

Thankyou u sir...........

VAT is leviable on Canned Software that are sold in stores on a media in packages. These are ready to use or RTL  versions (Ready to Launch) of the softwares like Microsoft Windows etc. They can also be downloaded from the Net and saved by user even if you purchase it with extended licences for more users.

Service Tax is Leviable on Software that someone customises for you and installs on your computer. You may have a backup of this or he may make a backup for you on any portable storage or media that you can extract later on. This is uncanned software.

Service Tax is levied on companies like Microsoft that provide a source code to developers to develop software certified for use on their envronment (eg. if Microsoft gives you the source code to develop software or drivers that run on their Windows OS if it is in the nature of a royalty to use.

Software that is Licenced out to you to modify and sell will incur service tax the first time the buyer buys it. After that it depends on whether that buyer sells it as a canned software or an uncanned customised software.

When company like HP buys the Windows OS and gives it to you on laptop, there is no CD from Microsoft. The HP buys the licence on royalty basis for certain number of PCs from MS and pays the a licensing fee with Service Tax (or on reverse charge mehanism if obtained from abroad). Then they include it in your Laptop and you are paying the VAT on your laptop.

If you buy a Multi User Tally from the Shop you Pay VAT. Then someone comes and installs it for you or may customise it on your computer to work as per your needs within the terms of license issued by Tally with the package, you pay service tax to the person rendering to you the service to customise it in your office. In this case the customisation is not done on Tally itself. It is just that you get a professional to help you set it up and you pay service tax only on that professional fees.

It is better to first identify what you are doing and then determine the taxability.

thanks for explaining..........

A five judge constitution Bench headed by Justice N Santosh Hegde said the software were goods under the Sales Tax Act.

This judgement was given on petition filed by Tata Consultancy Services challenging a Andhra Pradesh High Court order which had also held software to be goods under Sales Tax Act.

With this ruling all states in India would be entitled to levy sales tax on software.

regards,

ratan