TaxTMI 
TaxTMI 
A manufacturing concern obtained a software license for certain period. The service provider has charged 4% VAT (Tamilnadu VAT) in the bill in addition to service tax. The company is eligible for taking credit of Input VAT for other goods.Whether input tax credit be availed by the manufacturing concern for software License?
VAT Input Credit on Software License
26 Apr 2012 
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Input tax credit on software licenses may be available where licensed software is treated as capital goods.
Where software licences are capitalised and treated as capital goods used in the course of taxable business, input tax credit is consistent with the TNVAT Act definition of input tax and the allowance for credit on capital goods; however, due to absence of an express statutory denial, seek consultant advice or obtain departmental clarification or an advance ruling before claiming the credit. (AI Summary)
Where software licences are capitalised and treated as capital goods used in the course of taxable business, input tax credit is consistent with the TNVAT Act definition of input tax and the allowance for credit on capital goods; however, due to absence of an express statutory denial, seek consultant advice or obtain departmental clarification or an advance ruling before claiming the credit. (AI Summary)