Service tax on Electronic Software Distribution

[MITSUI PRIME ADVANCED]

Dear Sir

 

Good Evening

 

Please provide your valuable ssugguation  in below mention , which is related to Service Tax :-

We have interested buy a software form our consulting firm M/s NTT Softwares services pvt ltd. which is software provided through Electronically , Service Tax @ 12.36% and vat or both are applicable on ESD (Electronic software  Distribution) ?

Please provide your valuable sugguation as soon as possible.

Arjun Sachdeva

Alwar 301001

Cell No. 09928158547

 

[CASeetharaman KC]

Digital distribution (also called content delivery, online distribution, or electronic software distribution (ESD), among others) describes the delivery of media content such as audio, video,software and video games, without the use of physical media usually over online delivery mediums, such as the Internet. Digital distribution bypasses conventional physical distribution methods, such as paper or DVDs. The term online distribution is typically applied to freestanding products; downloadable add-ons for other products are more commonly known as downloadable content. Electronic Sofware Disrtibution is therefore a service  and the following questions need to be answered for determining taxability:

What is the place of provision of the service?

Is the place of provision in taxable territory? If yes, tax will be payable. If not, tax will

not be payable.

Is the provider ‘located’ in the taxable territory? If yes, he will pay the tax.

If not, is the service receiver located in taxable territory? If yes, he may be liable to

pay tax on reverse charge basis.

AI Summary

Place of provision for electronic software distribution determines service tax liability and potential reverse charge obligations. Applicability of service tax to Electronic Software Distribution depends on treating ESD as a service and determining the place of provision. If the place of provision is within the taxable territory, the provider located there must pay tax. If the provider is located outside the taxable territory, a service recipient within the taxable territory may be liable under the reverse charge mechanism. Key assessment questions are place of provision, whether that place is in taxable territory, provider location, and receiver location for reverse charge application.