Applicability of service tax on software and website development

[Guest]

I am in the business of software and website development. I develop the software inhouse, but acquire the domain and web-space from other agencies. Does my work come under Service or Sales Tax?

[Surender Gupta]

If you are getting any commission from re-sale of domain or web-space, the provision of service tax may be applicable. On the other side, since the Designing Services are proposed to included, you must be careful for service tax on website development.

[Madhukar N Hiregange]

In my view till Fin Act 2007 you would not be liable as your main activityis one of software development. Section 65A sets out that in a composite service the dominant one is to be considered. Of course if you charge all composnents separately then there maybe a liability on other activties. Resale of a service in my view is not liable to servcie tax as you would be a servcie tarder and not a servcie provider. This view however requires judciial concurence

AI Summary

Service Tax Applicability on Software Development: Commissions and Designing Services May Attract Tax Under Finance Act 2007. A business owner in software and website development inquires about the applicability of service tax on their activities. One respondent suggests that if commissions are earned from reselling domains or web-space, service tax may apply, especially with the inclusion of designing services. Another respondent argues that, under the Finance Act 2007, the primary activity of software development may not attract service tax, as it is considered the dominant service. However, if components are charged separately, there might be tax liabilities on other activities. Reselling services might not incur service tax, but this view requires judicial agreement.