Filing of sales tax returns for softwares

This query is : Resolved

Mallika Padmanabhan (Querist)
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21 December 2009 We are a traders of software. As per the new rules we are charging both service tax & Sales tax to our customer.

Eg. Software 1,00,000/-
Service tax 10,300/-
Total 1,10,300/-
Sales Tax4% 4,412/-
Grand Total 1,14,712/-

While filing of sales tax montly return we have to show as the sales done Rs. 1,10,300/- but actual sales turnover shows in our account as Rs.1,00,000/-. Can you please guide me will there be any problem for this case in future, sales tax assessment.

Also please inform me what amount should i consider in sales tax return filing as purchase amount. Is it should be inclusive of service tax or exclusive.

CA Vijay Kumar Gupta

CA Vijay Kumar Gupta (Expert)
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21 December 2009 because vat/cst is leviable on the sale price of goods including software (after tcs case of AP high court), your sale price as per vat/cst act is Rs.110300/- but for accounting point of view, your sales is Rs. 1,00,000/-. You can file reconciliation of this, before assessing authority whenever any clarification is demanded in this regard.

Mallika Padmanabhan

Mallika Padmanabhan (Querist)
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22 December 2009 What about purchase price if Rs.70,000/- is software value service tax is Rs.7,210/- and CST is Rs.3088/-.

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Asha Kanta Sharma

Asha Kanta Sharma

(Expert)
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24 July 2024 In your scenario where you have purchased software for Rs. 70,000/- and incurred both service tax and Central Sales Tax (CST), here’s how you should handle the reporting for sales tax returns:

### Purchase Price Consideration:

1. **Software Purchase Price:**
- Software Value: Rs. 70,000/-
- Service Tax: Rs. 7,210/-
- CST: Rs. 3,088/-

2. **Total Purchase Amount:**
- Total Amount Paid: Rs. 70,000 (Software Value) + Rs. 7,210 (Service Tax) + Rs. 3,088 (CST) = Rs. 80,298/-

### Reporting in Sales Tax Returns:

1. **Sales Turnover to Report:**
- When you sell the software to your customers, you should include the total amount billed to them, which includes the software value plus the service tax and any other applicable taxes (like CST in this case).
- Total Billed Amount: Software Value (Rs. 70,000) + Service Tax (Rs. 7,210) + CST (Rs. 3,088) = Rs. 80,298/-

2. **Purchase Price to Report:**
- When reporting purchases in your sales tax return, you typically report the base cost of the software exclusive of service tax and CST.
- Purchase Price: Rs. 70,000/-

### Example Clarification:

- **Software Purchase:** Rs. 70,000/-
- **Service Tax:** Rs. 7,210/-
- **CST:** Rs. 3,088/-
- **Total Amount Billed to Customer:** Rs. 80,298/-

### Documentation and Compliance:

- Ensure all invoices and documentation accurately reflect the amounts billed and received from customers.
- Maintain proper records of sales invoices, purchase invoices, and tax payments to support your filings during assessments.

### Conclusion:

By correctly reporting the total sales turnover inclusive of both software and taxes (service tax and CST), and reporting the purchase amount exclusive of these taxes, you maintain compliance with sales tax regulations. This approach ensures accurate reporting and helps in smooth assessments. Always consult with a tax professional or accountant for specific guidance tailored to your business and jurisdiction to ensure compliance with all tax obligations.