Applicability of excise duty or service tax - packaged software

[Sanjeev Sharma]

A new Company has started devloping software and which will be sold as Packaged software to their customers. Along with VAT , whether Company has to charge Excise Duty or Service Tax . Being a company owned by Foreign Comapny, whether exemption limit of 1.50 crore in excise can be availed.

[Mukesh Kumar]

Development and sale of packaged software is subject to duties of central excise and local VAT. There is no service tax on packaged software. In case of central excise duty, the status of assessee is no material. Where the development and sale activity is being done in India, he can claim for exemption upto 1.5 crores subject to the other conditions of notification no. 8/2003 CE dated 1.3.2003 as applicable to SSI units. On the other side, if the development activity is being done outside India and the same is sold in India after being import, the same is subject to Customs Duty. In that case, there is no question of exemption.

AI Summary

Packaged Software in India: Excise Duty Exemption for Local Development, VAT Applies, Service Tax Exempt A company developing and selling packaged software in India must consider central excise duties and local VAT, but not service tax. The exemption limit of 1.5 crore for excise duty can be claimed if the development and sale occur within India, subject to conditions under notification no. 8/2003 CE applicable to SSI units. If the software is developed abroad and imported for sale in India, it is subject to customs duty, and the excise exemption does not apply.