Dual Taxation Concept

[CHITRA RAGURAM]

An IT company selling software to our company raised the bill as follows:

Product Value - 100

Service Tax - 10.3

VAT - 4% on 110.30

On enquiry, they replied this is dual taxation concept. Service Tax and VAT both applies for software. Also i feel, since this is a technical service TDS to be deducted u/s. 194J. Please advice

AI Summary

Dual Taxation on Software: TDS Under Section 194J Applies Only to Installation, Not Purchases; VAT and Service Tax Explained An IT company invoiced software with both Service Tax and VAT, citing dual taxation. The query raised concerns about deducting TDS under section 194J for technical services. One response clarified that TDS should only apply to installation charges, not software purchases. Another response explained that since May 2008, software services are subject to Service Tax, and VAT applies to the right to use software. The responder argued that VAT should be calculated on the product value of 100, excluding Service Tax, as both taxes are levied simultaneously.