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of <h1>Clarification on Indirect Taxes for Packaged Software: Excise Duty, Service Tax, and Exemptions Addressed in 2009 Budget.</h1> The circular addresses the applicability of indirect taxes on packaged software, specifically focusing on shrink-wrapped software. It clarifies that while IT software is exempt from basic customs duty, packaged software incurs an 8% excise duty. The 2008 budget introduced service tax on the intellectual property rights portion of software costs. To prevent double taxation, the 2009 budget provided partial exemptions from excise duty and countervailing duty (CVD) for the value attributed to the 'right to use' the software. Issues arose in Mumbai and Chennai regarding the interpretation of these exemptions, prompting clarifications that the term 'and' should be read as 'or' and allowing value splitting for software media and usage rights.
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