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

Imported software service taxed under reverse charge; recipient must pay service tax for electronically supplied foreign software. Electronically supplied foreign software that grants a right to use and is not delivered as packaged goods constitutes an imported IT software service. The Indian recipient is liable to account for and pay service tax under the reverse charge mechanism for such services.