Categories: GST (Goods and Services Tax)

vat & service tax – taxability of software

VAT & SERVICE TAX – TAX-ABILITY OF SOFTWARE & RELATED MATTER OVERVIEW

 

  • SOFTWARE– To be treated status quo with implications in case of software.
  • CLOUD SHARING: – Liable to Service tax
  • ONLINE DATABASE SHARING: – Liable to Service tax
  • VALUE ADDED SERVICES: – Liable to Service tax like subscription for pro-chat, premium services etc. If charges for transfer the same shall be liable to VAT.
  • AMC CONTRACT– Discussed separately under clause ‘H’.
  • SALE OF LICENSE– Liable to Service tax if no transfer of right to use while liable for sales tax if transfer for right to use under deemed sale concept. Largely would depend on case to case basis.
  • ONSITE DEVELOPMENT OF SOFTWARE – Liable to Service Tax
  • ADVICE, CONSULTANCY AND ASSISTANCE ON MATTERS RELATING TO INFORMATION TECHNOLOGY SOFTWARE – Liable to Service tax
  • Where client SPECIFIC SOFTWARE IS DEVELOPED for the client in such a way that the intellectual property developed belongs to the client/customer (just like a job-work) from the very beginning without the creator retaining any ownership rights over the same, the arrangement would be one of service and not sale of goods. The same has been confirmed under Sasken Communication Technologies Ltd Vs Joint Commissioner of Commercial Taxes, Bangalore (2011 (4) TMI 566 – Karnataka High Court)
  • CUSTOMISED (BESPOKE) SOFTWARE DEVELOPED AND IMPLEMENTED:- Liable to both Sales tax and Service tax.  In this context, one important ruling can be discussed here. The ruling is by foreign court i.e. in case of LevobVerzekeringen BV and OV Bank NV v. Secretary of State for Finance, Netherlands [2012] 174 (ECJ)
  • wherein it was held that Supply of basic software along with subsequent customisation thereof to meet requirements of customer and training to his employees under a single contract is a single indivisible supply of service and whole of the receipts are liable to service tax on Dominant nature test.

More read:

  • MANPOWER SUPPLY: – Liable to Service tax

For query or help, contact: singh@carajput.com or call at 9555555480.

Tags: AMC ContractCloud SharingManpower SupplyOnline database SharingSale of License.service tax on Dominant natureSPECIFIC SOFTWARE
11 years ago
Rajput Jain & Associates

Rajput Jain & Associates is a Chartered Accountants firm, with it's headquarter situated at New Delhi (the capital of India). The firm has been set up by a group of young, enthusiastic, highly skilled and motivated professionals who have taken experience from top consulting firms and are extensively experienced in their chosen fields has providing a wide array of Accounting, Auditing, Taxation, Assurance and Business advisory services to various clients and their stakeholders. Rajput jain & Associates, a professional firm, offers its clients a full range of services, To serve better and to bring bucket of services under one roof, the firm has merged with it various Chartered Accountancy firms pioneer in diversified fields. We have associates all over India in big cities. All our offices are well equipped with latest technological support with updated reference materials. We have a large team of professionals other than our Core Team members to meet the requirements of our prospective clients including the existing ones. However, considering our commitment towards high quality services to our clients, our team keeps on growing with more and more associates having strong professional background with good exposure in the related areas of responsibility.

Leave a Comment

Related Post

Recent Posts

ITR filling for Salaried Individual for AY 2026-27

Income Tax Return filling for Salaried Individuals for AY 2026-27 Income Tax Return (ITR) Forms ITR-1 (Sahaj) ITR-1 (Sahaj) is… Read More

2 days ago

Compliance Calendar for the Month of July 2026

Compliance Calendar for the Month of July 2026  The Compliance Calendar for July 2026 covers key statutory due dates under… Read More

4 days ago

GSTN Revises AATO Amendment Timeline for FY 2025-26

GSTN Revises Timeline for Amendment of Aggregate Annual Turnover for FY 2025-26 GSTN through its advisory dated 1 July 2026,… Read More

4 days ago

Valuation for Impairment Testing : Guide under Ind AS 36

Valuation for Impairment Testing – A Comprehensive Guide under Ind AS 36 In today’s dynamic business environment, assets may lose… Read More

4 days ago

ICAI to Modernize Tirupati Temple Donation Accounting System

Institute of Chartered Accountants of India to Help Tirumala Tirupati Devasthanams Enhance Accounting System significant development where Tirumala Tirupati Devasthanams,… Read More

2 weeks ago

Clubbing of Income & Tax Logic Behind Gifting Assets

Understanding Clubbing of Income & Tax Logic Behind Gifting Assets Gifting money or assets to family members is a common… Read More

2 weeks ago
Call Us Enquire Now