tax implication on "export of software"

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santan mishra

santan mishra (Querist)
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24 May 2010 what sort of tax implications do the business of "export of software" attracts towards itself?

Thanks

Guest

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24 May 2010 There are various tax provisions under the Income Tax Act 1961 on the income from export of software.

TAX PROVISIONS

Income Tax Act U/S 10A: provides for special provision in respect of newly established undertakings in Free Trade Zones ("FTZs") etc.
Under this section, profits and gains derived from the export of articles or things or computer software by an undertaking set up in any of the Free Trade Zone, Software Technology Park areas (STP) and electronic hardware technology park ("EHTP") areas are fully exempt for a period till 31st March 2010.

Income Tax Act U/S 10B: special provision in respect of newly established hundred percent export oriented undertakings (EOU).
Under this section, profits and gains derived from the export of articles or things or computer software by a hundred percent export oriented undertakings (EOU) are fully exempt for a period till 31st March 2010.

Section 35 of the Income Tax Act provides for tax deduction of any expenditure incurred on scientific research.
Any expenditure laid out on scientific research related to the business of a taxpayer is allowed as a deduction while computing taxable income.
Sub-section (2AB) of section 35 of the Income Tax Act provides for a deduction of 125% of any expenditure incurred by a company engaged in the business of manufacture or production of any drugs, pharmaceuticals, electronic equipments, computers, telecom equipments, chemicals or any other notified article, on scientific research (not towards cost of land or building) on in-house research and development facility as approved by the prescribed authority.

Section 80 HHE of the INCOME Tax Act: deals with the deduction in respect of profits from export of computer software, etc.
Under this section if a company or a person is engaged in the business of --
(i) export out of India of computer software or its transmission from India to a place outside India by any means;
(ii) providing technical services outside India in connection with the development or production of computer software;
Then the profits derived from his business would be deductible from its taxable income .The extent of the deduction shall be an amount equal to 80% for assessment year beginning on 1st April 2001, 60% for 2002, 40% for 2003, 20% for 2004 and then no deduction will be allowed there after.

This deduction will be available provided the consideration in respect of the export of computer software is received in, or brought into India in convertible foreign exchange within a period of six months from the end of that financial year. This benefit is available only to Indian companies or Indian residents. This benefit is also available to supporting software developer selling computer software to exporting company.

santan mishra

santan mishra (Querist)
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24 May 2010 thanx for ur suggestion but still need to know that does this business attract provisions of service tax act or DvAT act or any of the provisions of TDS????????

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