Go AD-Free with CAclubindia Pro and get a FREE CCI Coffee Mug. Subscribe Now!

Tax for importing software

Ambrish Goradia (Asst) (26 Points)

26 December 2015

What are tax rates for importing in India amd what are tax if a person downloades software from foreign country

Reply
Follow
Share

4 Replies

Yogesh K Shah (CA) (30 Points)
Replied 27 December 2015

No customs duties are currently levied on software downloaded from the Internet.

However, if the software is embedded or pre-loaded on equipment, then Customs duties are applicable on such imports.

IT Software is classified under the tariff heading 8523 80 20 of the First Schedule to Customs Tariff Act. The entry 8523 covers only that software which is stored on a tangible media and not otherwise. Therefore, no custom duty will be levied in case of electronic download of software.

However, if software is imported embedded or pre-loaded on equipment, like loaded on CD, custom duty will be levied @ 10% Basic Customs Duy in addition to this CVD & SAD if packaged or canned software is imported is applicable.

However the current answer does include a lot of ifs and buts depending on what exactly the trasaction is, as there are a lot of details involved in the same like packaged, tailor made, via download, phydically imported, Service Tax (if applicable) then import under reverse charge will be applicable. Therefore please provide transactions in detail

Upgrade to CAclubindia Pro. Subscribe Now!

Ambrish Goradia (Asst) (26 Points)
Replied 27 December 2015

My friend is acquiring a dealership from a US based company to sell their software in India. He will be importing it and reselling in India. So he wanted to know what taxes would be applicable for importing the software

Madhukar N Hiregange (Chartered Accountant) (39039 Points)
Replied 28 December 2015

The downloading of software with all rights transferred wouldbe liable to VAT only. [ Presently not liable] However if it is temporary ( licesne) then service tax applicable presenlty at 14.5% on reverse charge out of which 14% is available for set off. This can be used when the s/w is further licensed and couldbe liable for both CST/VAT + ST when sold again due to confusion still on since 2008.

Ambrish Goradia (Asst) (26 Points)
Replied 28 December 2015

So it means that if he imports and sells the software he would have to pay custom duty @ 10% but if his client pays directly to the company and downloads fully licensed software they would be liable to pay vat in his Returns