Tax Structure Base in Cloud Businees

[Vidhi Agroyee]

Dear Sir,

We are MS LAR partner in the India in which we do purchase from Microsoft and resale to our customer.

As earlier our business was License based, In which MS directly transfer license to the customer which was treated as Shipping and License address of the customer for Tax structure(VAT/CST) purpose.

But now there is change in the business, In which MS provide cloud business to the customer, and customer transfer this to their different subsidiary in different location according to the requirement.

So my concern is what will be tax structure base in this.

Regards

AI Summary

Microsoft Partner in India Transitions to Cloud Services, Faces Tax Uncertainty on SAAS Model Under DVAT Act, 2003 A business partner of Microsoft in India is transitioning from licensing to cloud-based services and seeks guidance on the applicable tax structure. Previously, licenses were directly transferred to customers, subject to VAT/CST. With the shift to cloud services, concerns arise about the correct tax treatment. One expert suggests that accessing servers might incur service tax on a reverse charge basis rather than VAT/CST. Another expert indicates that the Software as a Service (SAAS) model could fall under 'Right to Use,' potentially subjecting it to VAT under the DVAT Act, 2003, and recommends seeking clarification from tax authorities.