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100% eou (stpi) allowed to do trade

Sreejith S (Manager-Finance) (95 Points)

04 August 2011

Can anybody advice me if a 100% EOU registered under STPI scheme can undertake trade? ie Can the firm import readymade software from aborad and sell the same in DTA?

Thanks

Sreejith

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4 Replies

CA Unnikrishnan Nair N (Chartered Accountant) (2083 Points)
Replied 04 August 2011

As far as I know there is nothing illegal. But the trading goods cannot be brought to the premises registered as EOU.

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Sreejith S (Manager-Finance) (95 Points)
Replied 04 August 2011

Thank you Sir for the clarification. This is a packaged software product which we are planning to import from USA and trying to sell in domestic market. We have DTA sales permission from STPI to udertake DTA sales up to 50% of the export turn over and hence there is no problem for us to do domestic sales.

But buying software from one contry and selling it in domestic market is " mear trade". I wonder if this is premissible to a 100% EOU. If it is permissible what tax shold we charged in the Invoice? (Excise duty or Service Tax or VAT) or can we sell the software without collecting any duty as we will be paying fully customs duty at the time of import? Could you please clarify this also?

Thanks

Sreejith

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 04 August 2011

Packaged softwares (TSH 8523) are under central excise and CVD ( in lieu of excise duty) would be charged at the time of imports, hence no futher excise duty or service tax applicable on such items on sale "as is where is" basis, for purely trading purpose.

however any amount charged additionally as AMC, installation, after sales support etc would invite service tax.

CA Unnikrishnan Nair N (Chartered Accountant) (2083 Points)
Replied 05 August 2011

As far as I know the upper ilmit of 50% DTA sales applies to softwares developed by you. Trading softwares may not come undet this cap. Regarding sale of the imported software, I feel that the same attracts both service tax and VAT.