Taxability of services

[sunil mehta]

whether the foll: services are liable to servicetax? : (A)i)web-designing ii)web-hosting iii)web-based software iv)portal development & other related work. (B)Any other custmised software(non web based)

[Surender Gupta]

Web designing, hosting, software development and other related activities are not liable to service tax.

[Madhukar N Hiregange]

It appears that all the services are software development service therefore may not be liable at all.

[Vijay Chitte]

Dear Sunil, As per your query web designing, web hosting is a taxable service under the catergory of "Business Support Service". The act provides for a defination of BSS which it includes the term "Infratructural support services". For the purpose of this clause, the expression "Infrastructural support services" includes providing office along with office utilities, lounge, reception, with competent personnel to handle messages, secretarial services, internet and telecom facilities, pantry and security". Web Hosting service can be said to be "Business Support Service" since it support the "Business activities" of an organization. Internet and Web Hosting" is a "base" and an "underlying foundation" for the web presence of an organization. A web presence allows an organization to carry out their business effectively and with higher efficiencies. Therefore, providing "Web Hosting" is "infrastructural" in nature. If you are selling the customised software then 4% vat applicable and if you are providing customised related serivce, then its fall under the "Repaire and maintainance of computer software service" for details, you may refer circular "F.No. 81/2/2005-st. Vijay Chitte-Claris.

AI Summary

Taxability of web hosting as Business Support Service may be taxable infrastructural support, while web development classification remains contested.
Whether web designing, web hosting, web-based software, portal development and related work, and customised non-web software are liable to service tax is contested. Two respondents view these as software development not subject to service tax, while an alternate view treats web hosting as a taxable Business Support Service because it is an infrastructural support service (including internet and telecom facilities). The sale of customised software is identified as subject to value added tax, and related services may be classifiable as Repair and Maintenance of Computer Software.