Tax advise

This query is : Resolved

ratul baishya (Querist)
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27 December 2014 I have a software co. To develops and provide to the clients as per their requirements. Which type of taxes are attracted to the co. Plz systematically elaborate.

CA Robin Betala

CA Robin Betala (Expert)
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27 December 2014 In my opinion Customised Software other then packaged software or canned software are exempted from Levy of Excise Duty per entry 27 general exemption 6/06.

There is no Custom Duty on Customised Software.

As Customised software are not treated as good it may come under net of Service tax and in my opinion liable to service tax.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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27 December 2014 Vat and service tax is applicable besides income tax on profit earned. Please see the link.

In the landmark judgment of Bharat Sanchar Nigam Ltd. v. Union of India, (2006) 1453 STC 91 — the Hon. Supreme Court held that a goods may be a tangible property or an intangible one, it would become goods, if it satisfies the test. It observed in para 56 that :

This view was adopted in Tata Consultancy Services v. State of Andhra Pradesh, for the purposes of levy of sales tax on computer software. It was held :

"A ‘goods’ may be a tangible property or an intangible one. It would become goods provided it has the attributes thereof having regard to (a) its utility; (b) capable of being bought and sold; and (c) capable of being transmitted, transferred, delivered, stored and possessed. If a software whether customised or non-customised satisfies these attributes, the same would be goods."

This makes it clear that whether the software is a customised one or otherwise, it would be goods.

http://www.bcasonline.org/articles/artin.asp?857

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CA Kumar Mukesh

CA Kumar Mukesh (Expert)
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27 December 2014 Whether VAT or Service Tax is levied depend upon the fact of case.

if it is simply service are in the nature development,designing, programming, customization etc of Information Technology Softare then it is declared services within the meaning of section 66E(d) of chapter V of finance act 1994,

However, in other cases VAT would be levied by treating it as Goods.