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Service tax on digital services

RAJIV AGARWALLA (financial advisor and accountant) (50 Points)

12 August 2011

I am looking after a digital service account.my purchaser bill me in two part one actvation charges for which i pay service tax second is product for which i pay vat.now when i sell the product to customer the CD the price is fixed.now my question is whether i have to segregrate the CD sold in two part one for activation and second for product,to collect the sevice tax and vat? what will be the basis if yes? or i have to charge vat only?

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RAJIV AGARWALLA (financial advisor and accountant) (50 Points)
Replied 12 August 2011

Originally posted by : RAJIV AGARWALLA
	I am looking after a digital service account.my purchaser bill me in two part one actvation charges for which i pay service tax second is product for which i pay vat.now when i sell the product to customer the CD the price is fixed.now my question is whether i have to segregrate the CD sold in two part one for activation and second for product,to collect the sevice tax and vat? what will be the basis if yes? or i have to charge vat only?

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(Guest)

Selling of CD [any product] do not attract any Service Tax.

So you can not collect Service Tax on its selling.

Break up of CD’s Price is not required.

CA Unnikrishnan Nair N (Chartered Accountant) (2083 Points)
Replied 12 August 2011

Separate billing is strongly advised. As long as the supplier has billed you for goods and services, you hold the title of both the the goods and services. Therefore, when you supply the same to your customers, the service might be deemed to have been provided by you and same might become taxable in your hands as well. Basic exemption of Rs.10L is available if you are not using others trade mark. VAT on sale of goods is certain.

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