SERVICE TAX ON SOFTWARE DEVELOPMENT AND CONSULTING EXPENSES

[LILUWENDRA CHATURVEDI]

We are paying Rs 65,000.00 Per Month to consultants on account of  development of software  consultancy for maintenance. Service tax is applicable but the service provider do not charge.

Please clarify following:

Are we liable to pay service Tax  as service receiver?

If yeas . What will be percentage. Will it be under maintenance and repair As 70 percent ?

Regards

 L.K.Chaturvedi

AI Summary

Reverse charge on software consultancy services not applicable; service receiver not liable; Cenvat credit subject to VCES and Cenvat rules.
Payment for software development and consultancy services does not trigger recipient liability under the reverse charge mechanism per Notification No. 30/2012-ST; the provider may be under the threshold exemption and recipient due care (correct address, payment by cheque) mitigates liability. Software maintenance is a service distinct from a works contract. Cenvat credit for service tax discharged under VCES is permissible only by following VCES provisions and the Cenvat Credit Rules, 2004 as amended, including any procedural or time limit conditions.