Taxabiity of Service tax - production and sale of software outside India

[puneet virmani]

'A' company engaged in providing service in relation to production-sale of software outside india to a company situated in britain also undertaking contract as to maintenence of that software & also undertaking the job of calculating pay of its employees by software and payment is recieved in convertible foreign exchange.Is service tax payable. further this indian company engaged another foreign company for doing laison & other work with company to whom developed software is being sold & oommission charges are being paid to that foreign company.is service tax payable on that amount also.

[Surender Gupta]

There is no service tax on production / development of software irrespective of the fact that the remuneration is fixed in accordance with the man days involved. However, the amount paid for laison or other work is to be seen in detail and taxability is to be decided accordingly.

AI Summary

Service tax on software development: production/export of software not taxable; liaison fees require detailed review.
Production and development of software exported outside India, with receipts in convertible foreign exchange, is not liable to service tax irrespective of whether remuneration is fixed by man-days. Payments to a foreign liaison or intermediary for liaison and related work are not automatically covered by this non-taxability and require detailed, fact-specific examination to determine service tax liability.