Service Tax & Vat Bot charged on Window 8.1 Professional purchased

[MITSUI PRIME ADVANCED]

Dear Sir

We have to buy window profession for 20 users and vendor has make the invoice. His calculation of invoice is

Price of Window: 216420

Service Tax 12.36%: 26750

Vat @5%: 12158

Total 255328.00

Kindly confirm he make correct calculation of tax.

Regards

Lokesh Kumar

[Emco Ltd.]

Service Tax is being charged on Services Performed by the Windows 8.1 Professional i.e. installation and other guidance for installation and VAT is being charges for selling of product so that their calculation of tax is absolutely right.

Regards

Amit parmar

Emco Ltd.

[YAGAY andSUN]

Dear Lokesh,

We may have different opinion on this matter. Please clarify following points to enable us to finalize our opinion on this matter.

1. Whether windows 8.1 would be supplied as canned software or downloaded through internet?
2. Whether in your agreement specific clause for uploading, installation of software do exist and what are the charges for same.
3. Whether it is one time charges/price or recurring charges/price.

Regards,

YAGAY and SUN

(Management and Indirect Tax Consultants)

[Rajagopalan Ranganathan]

Sir,

Please find provided hereunder a summary of taxability of information Technology software: -

Category	Whether Excise duty is payable	Custom duty	Service Tax	VAT/CST
Packaged software with MRP	Yes (if manufactured in India)	Only CVD and SAD payable on import	No	Yes
Packaged software without MRP	Excise duty on cost of media	Only CVD and SAD payable on cost of media on import	Service tax on transfer of right to use software	Yes
Customised (tailor made) software	No	No	Yes	yes
Paper licence of software and PUK cards	No	No	yes	Yes
Software downloaded from Indian supplier	No	No	Payable by supplier	No
Software downloaded on internet from out of India	No	No	Yes, as import of service	Not applicable to person downloading software.

[YAGAY andSUN]

Dear Lokesh,

Please check our reply to following query on this website.

Issue Id: - 5432 Dated: -18-03-2013

Regards

YAGAY and SUN

(Management and Indirect Tax Consultants)

[Madhukar N Hiregange]

If the supply is in physical form then only VAT/CST would be applicable.

If downloaded from the net [ seller outside India] then only ST

The terms and method in which it is being provided is important as the centre + States both want to tax this transaction.

One of the methods being used no a days is only access allowed, ONLY ST for business for individuals it would be not liable to either VAT or ST.

AI Summary

Software tax treatment: VAT on physical packaged copies; service tax on installation and imported downloads. VAT applies to software supplied in physical form (packaged copies or media) sold to customers, while service tax applies to installation, guidance and other ancillary services. Downloaded software from overseas is treated as import of service and may attract service tax; downloaded software from domestic suppliers may lead to supplier liability for service tax. Characterisation depends on delivery format, contractual terms, allocation of charges, and whether software is customised, licensed on paper, or provided with media.