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

No Service Tax on Software Production in India; Liaison Work Payments Under Review for Taxability. A company in India provides services related to the production and sale of software to a British company, including software maintenance and payroll calculations, with payments received in convertible foreign exchange. A query was raised about the applicability of service tax on these services and on commission charges paid to a foreign company for liaison work. The response clarified that there is no service tax on software production or development, regardless of payment terms. However, the taxability of payments for liaison or other work requires further examination.