TaxTMI 
TaxTMI 
We have purhased windows software, vendor is charging 5% VAT & 10.3% Service tax, both on basic sale value.
Is this right.
Service Tax & VAT applicability on standard software purchase like windows
17 Jun 2011 
1 Reply 
6610 Views Asked by
Software classification as good versus service can produce concurrent VAT and service tax liability on packaged software.
Vendors sometimes impose both value-added tax and service tax on packaged software because state VAT law treats software as goods while service tax treats transfers of a mere right to use as a service; only transfer of source code and full proprietary rights converts the transaction into a sale of software for goods-tax purposes, and dual charging is used to mitigate departmental disputes but results in overlapping tax incidence. (AI Summary)
Vendors sometimes impose both value-added tax and service tax on packaged software because state VAT law treats software as goods while service tax treats transfers of a mere right to use as a service; only transfer of source code and full proprietary rights converts the transaction into a sale of software for goods-tax purposes, and dual charging is used to mitigate departmental disputes but results in overlapping tax incidence. (AI Summary)