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

Customs duty applies to both physical and electronic software imports; electronic imports require certification and customs notification. Both physical and non-physical software imports attract customs duty. For non-physical imports a Chartered Accountant's certificate confirming receipt is required and an AD Category I bank should advise importers to inform Customs Authorities of such imports.