software services

[sunil mehta]

1) Budget notfn. no.25/2011 dt 01/03/2011  has only given concession to those service providers who imports packaged software ( under ch.85 of 1st.sch. of customs tariff act )and where it is not required to declare 'MRP' on the product.They are exempted from paying ' additional duty of customs' which represents---

--- the price payable for 'transfer of right to use'.In other words  the importer has to pay CVD only--(i)  on portion of value representing value of medium on which it is recorded and ---(ii) on freight & insurance.

 

2)A parallel notfn.no.14/2011--CE dt.01/03/2011  has been issued to give exemption in respect of C.Excise in similar way as explained above.

 

Query:-a)  Whether service tax will be payable after 1/3/2011 on import of  packaged software if importer pays CVD as mentioned above in (1) ? 

           b)  CVD on freight/insurance & CVD on  value of 'media'  will be very small which importer will pay .He will take exemption on CVD payable on 'value for right to use' which forms greater part of import bill.Therefore importer is benefited now?

 

3)The above notfn. has not replaced notification no. 53/2010 ST  dt.21/12/2010 . Service tax notification no.53/2010--ST dt.21/12/11 still exists.It is not rescinded.

Query:- Under what circumstances notfn. no. 53/2010 for import of packaged software will operate after 1/3/11 ?

 

AI Summary

Implications of Tax Notifications on Software Imports: Service Tax Applicability Post-March 1, 2011, and CVD Payments Clarified. A discussion initiated by an individual queries the implications of recent tax notifications on the import of packaged software. The notifications provide concessions on additional customs duties for software imports, focusing on the value of the medium and related costs, while exempting the transfer of usage rights. The individual seeks clarity on whether service tax applies post-March 1, 2011, if the importer pays the specified countervailing duty (CVD). They also inquire about the circumstances under which an earlier notification on service tax remains applicable. The response suggests further professional discussion to better understand the issue.