Software Purchase

[Guest]

We are planning to buy one software for our company located in india from Isreal. What will be the addition cost that i would incur while importing. The software license will transferred via digital, no physical delivery and paper licenses. Do I need to pay Excess Duty %/ Import Duty %or other charges?

[RB SINGH]

Hello Mr. Naikar,

In the conditions described by you, it appears that you are planning to have the right to use of imported software supplied electronically and not importing a packaged software. If that be so, it would be a receipt of service covered under the ambit of IT Software Services  [ Section 65(105) (zzzze) of the Finance Act].

Since the  transaction will be between an Indian Entity and a foreign party, it will be a service provided from outside India,received in India. In such case the services shall be taxable in the hands of the recipient under reverse charge (Section 66A of the Finance Act) . The liability to pay service tax  will be on your firm.

AI Summary

Indian Company Liable for Service Tax on Digitally Delivered Software from Israel Under Reverse Charge per Finance Act A company in India is planning to purchase software from Israel, delivered digitally without physical or paper licenses. The query concerns additional costs such as import or excess duties. The response clarifies that since the software is supplied electronically, it is considered a service under IT Software Services as per the Finance Act. The transaction, being a cross-border service, is subject to reverse charge, making the Indian company liable to pay service tax on the receipt of this service.