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Service tax and vat on a product

CA.Varalakshmi.M (Manager-Finance) (482 Points)

06 July 2012

Hi ,

We sale licensed softwares to our clients and apart from it we provide repair and maintenance services of that software.we charge both VAT and Service tax on bill amount.

Now my client is not willing to pay both service tax and VAT,asked us to charge any one tax only.what are the remedy's we have ?

What are the consequences of not charging those taxes by us.

Pls explain....

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3 Replies

Ajit kumar Dubey (Taxation Manager) (637 Points)
Replied 06 July 2012

If you do so, 100% liability will come upon you. and along with that, penalty of an equal amount of tax will be upon you. This is the position under Service Tax. Now choice is yours.

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CA.Varalakshmi.M (Manager-Finance) (482 Points)
Replied 06 July 2012

Thanks Ajit.

Then what abt VAT?

dnt we have any other option like taking undertaking from the client and like that?

Ajit kumar Dubey (Taxation Manager) (637 Points)
Replied 06 July 2012

Even if you take a declaration it would not suffice as the departmental cost will not be reimbursed under the said clause. For the purpose of VAT they will charge penalty and interest on the same.