Service Tax on software

[Surender Gupta]

What is the latest position of service tax on software

[Brijesh Verma]

Software development, design, upgradation advise, right to use as well as maintenance is taxable under different categories

[Surender Gupta]

Dear Brijesh Verma Ji, I have put this query for general discussion and to explore views of experts. Please explore more about all aspects as per your understanding and opinion. All the professionals who have any view on this issue, please come forward and post your replies.

[Ramanujam Varadarajan]

Design, development, upgradation of software - liable to service tax under ITSS

Maintenance or management of software - liable to service tax under Maintenance or repair

Transfer of software through a media -  liable to VAT/CST

Import of packaged software through a media - liable to customs, transfer of right to use portion excluded if service tax is paid

Domestic development/replication of packaged software through a media - liable to excise - right to use portion excluded if service tax is paid

In States like Karnataka - Software development/maitenance is treated as Works contract liable for VAT

AI Summary

Service tax on software: classification of development, maintenance and transfers determines indirect tax liabilities and allocation.
Design, development, upgradation and advisory software services are taxable as information technology services; maintenance is taxable as maintenance or repair. Transfers of software on physical media are subject to VAT/CST, imports of packaged software on media attract customs duties, and domestically supplied packaged software on media may be subject to excise. In some states software development/maintenance may be characterised as a works contract with VAT implications. Payment of service tax can exclude the right-to-use portion from other taxes.