Software Distribution and Applicable Taxes

[Guest]

Hello,

We would like to start a Software Distribution in India, the parent company is in UK.

There are two scenerios, one is importing that physically through CD media and distributing it here in India, in this case whate is the import duty we need to pay, do we need to pay VAT/CST in this case?

 

In scenerio two, we can download directly or end customer download directly and we provide only key to the software, I hope in this case we dont need to pay import duty...but what are the different taxes applicable in this case?

Kindly educate me.

 

Anil

[YAGAY andSUN]

In both the scenario you would have to pay the Customs Duty.

I do presume that scenari. 1 is very much clear to you.  For Scenario 2, please refer the following para C.73 of the RBI Master Circular No.13 /2012-13 dated 02-07-2012.

C.7.3. Non Physical Imports

(i) Where imports are made in non-physical form, i.e., software or data through internet / datacom channels and drawings and designs through e-mail/fax, a certificate from a Chartered Accountant that the software / data / drawing/ design has been received by the importer, may be obtained.

(ii) AD Category – I bank should advise importers to keep Customs Authorities informed of the imports made by them under this clause.

 

AI Summary

Clarification on tax obligations for importing software to India: customs duty applies to both physical and digital imports. A discussion on software distribution in India raised questions about applicable taxes when importing software from a UK-based parent company. Two scenarios were considered: importing physical media and distributing it in India, and downloading software directly, with only a key provided. The response clarified that customs duty applies in both cases. For non-physical imports, such as downloads, a Chartered Accountant's certificate confirming receipt is required, and importers should inform Customs Authorities, as outlined in the RBI Master Circular.