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

Cloud service taxation: classify SaaS as VAT "right to use" or service tax on reverse charge to determine applicable indirect tax.
The core issue is whether cloud/SaaS delivered by a licensor and accessed by customers (and their subsidiaries) is a service taxable under service tax on reverse charge or a taxable software "right to use" supply under VAT; taxpayers may seek an authoritative classification via the tax department's determination procedure to resolve the applicable indirect tax head.