Can you through some light on the applicability of service tax on "Software Licences" being traded in the normal course of business in the line of new services "Information Technology Software Services " introduced by the finance bill 2008 and service tax is applicable with effect from 16.0.5.2008 vide notification no. 18/2008 -Service Tax Dated 10.05.2008.
Since the Software Licences are already covered in the VAT act under the I.T.Software and taxable @ 4% under Delhi local VAT . Please also clarify the whether it will be liable to VAT also after the service tax notification.
Answer: the Information Technology Software Service is intending to cover the service starting from planning till the acquiring the right in the said information technology software. The scope of the service intended to be covered are specifically the following:
1. any service in relation to information technology software for use in the course or furtherance of business or commerce.
2. development of information technology software
3. study, analysis, design and programming of information technology software
4. adaptation, upgradation, enhancement, implementation and other similar services related to information technolgy software,
5. providing advice, consultancy and assistance on matters related to information technology software.
6. conducting feasible studies on implementation of a system, specifications for a database design, guidance and assistance during the startup phase of new system, specifications to secure a database, advice on proprietary information technology software,
7. acquiring the right to use information technology software for commercial exploitation including right to reproduce, dictribute and sell information technology software and right to use software componenets for the creation of and inclusion in other information technology services software products.
8. acquiring the right to use information techonlogy software supplied electrnically.
Taking note of the above mentioned,
We need to analyse the softwares as customised software or off the shelf software. If the software is off the shelf software then it is TCS case the same is treated as goods and hence service tax is not applicated. But customised software gets attracted.
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