ONLINE SOFTWARE IMPORT DUTY CALCULATION REG

[RAJESH AUDITHYAN]

Some of the online software are directly downloadable in computers. In such case how to declare value and pay duty to Customs ? For such outward remittances how to handle bank documentation under FEMA ?

[Pradeep Reddy Unnathi Partners]

No Customs Duty liability arises on the import of software in non-physical form i.e. import of software over the internet, as no physical goods are imported into India. IGST at 18% shall be payable on the import of such software.

A Chartered Accountant certificate confirming the import of software in non-physical form should be submitted to the AD banker for processing the outward remittance.

[Raghunandhaanan rvi]

As per the guidelines set by the Reserve Bank of India (RBI), authorized dealers (AD Banks) play a crucial role in enabling remittances for importing software through the Internet. To facilitate this process, importers must provide a declaration stating that they have received the software from the overseas supplier, an invoice containing details of the software supplied, a license authorizing the importer to use the software and copies of emails certified by the remitter's company. Furthermore, importers must keep the customs authorities informed of their imports.

[RAJESH AUDITHYAN]

Dear Mr.Pradeep Reddy / Mr. Raghunandhaanan

Many thanks for your inputs. I have gone through the Customs circular 15/2011-Customs - 18-3-2011  and I understand that  paper licenses or personal unlocking key (PUK) merit classification as per their individual character under heading 4907 in case of paper license & heading 4911 in case of PUK card the same being other printed matter.

Hence if overseas software supplier sends a document courier containing the invoice and license copy, user manual etc & if the IGM filed under cargo mode, the importer can file regular BoE and pay Customs duty and BoE also will be transmitted to banker. This will solve the  purpose of customs duty payment, BoE and bank outward remittance etc

Basic Customs duty

49070030  - Documents of title conveying the right to use Information Technology software 10%

49119910- Hard copy (printed) of computer software personal unlocking key (PUK) 10%

M/S. INGRAM MICRO INDIA LTD. VERSUS CC (AIR PORT & CARGO) , CHENNAI 2018 (8) TMI 1529 - CESTAT CHENNAI

HEWLETT PACKARD INDIA SALES PVT. LTD. VERSUS COMMISSIONER OF CUSTOMS BANGALORE 2019 (9) TMI 80 - CESTAT BANGALORE

Kindly check and share your view please

With rgds

Rajesh A

[Raghunandhaanan rvi]

Sir,

A paper licence without accompanying software is classifiable under HSN 49070030. If PUK cards are plastic or paper in the form of scratch cards, they are not titles to software. In such a case, they are classifiable under 4911 as other printed matter since they are also not accompanying software. - Thanks

[Shilpi Jain]

If you are considering the import as an import of goods, then no IGST should also be liable on this transaction since the goods are not crossing customs frontier as is the require of proviso to section 5(1) of the IGST act for levy of IGST.

Though this view could be disputed by department and in case the importer is eligble for creidt it can consider paying IGST and taking credit,

[RAJESH AUDITHYAN]

Mr. Raghunandhaanan / Ms.Shilpi

Many thanks for your valuable inputs

With rgds

Rajesh A

[Somnath Chakraborty]

I want to import software from US to India. Software will be sent to us in email and they will download and use that with key provided them via email. 

We will send that software to our customer in India. What are the all taxes applicable to complete this process. 

Previously before GST I have seen to use VAT or CST in Imported software, Withholding Taxes for paying to non  Indian company who do not have any office in India. So the taxes was huge approximately 48% (28% CST and 20% Withholding Taxes). With that our software cost was huge. So can you please help me to sort it out it would be great help. No one in the department also could clarify me.  Best regards Somnath

[Pradeep Reddy Unnathi Partners]

Import of software from the US through email is treated as import of service, GST at 18% is applicable on it. However, such GST can be claimed or recovered as an Input Tax Credit.

While selling the software to customers in India again it is taxable at 18%. 

Withholding Taxes for paying to non-Indian companies who do not have any office in India, has to be examined from an Income Tax standpoint

AI Summary

Import of Non-Physical Software: IGST applies and bank/AD documentation required; physical media may attract customs duty.
Electronically delivered software is treated as import of services and attracts IGST; AD banks require declaration, supplier invoice, licence evidence and certified communications, and a CA certificate may assist outward remittance. Physical documents or PUK/scratch cards sent by courier are classified by physical character and may attract customs duty when entered as cargo with a Bill of Entry. The applicability of IGST where no goods cross the customs frontier is contested; importers may pay IGST and claim input tax credit, and payments to nonresident suppliers raise income tax withholding considerations.