Vat and service tax on software

[K P RAMASWAMY]

we have been charged by the vendors for the customised software service tax and VAT.Is it correct?

AI Summary

VAT and Service Tax on Customized Software: Works Contract Considerations and Material Tax Implications. A query was raised about the applicability of VAT and service tax on customized software. One response highlighted that a transaction cannot simultaneously be classified as both a sale and a service, suggesting payment of both taxes to avoid litigation. Another response clarified that customized software, developed specifically for a client and not resold, is considered a service under a works contract and not subject to VAT. However, VAT may apply to materials like CDs or DVDs. It was advised to review the entire contractual terms to determine the correct tax liability.