E.KALAIKOVAN (Sr. Accounts Manager ) (340 Points)
03 April 2015A software was purchaed one year back. Now the user want to modify and new forms in that software. The software company charged 2,50,000 for that work. That company Charged Service Tax and VAT both on the entire value of the invoice.
Service Tax 12.36% on 2,50,000/-
VAT/CST 5.61% on 2,50,000/-
Doubt : If ST is charged on the entire value, then VAT/CST should be nil?
meet
(accountant)
(40 Points)
Replied 03 April 2015
| Originally posted by : E.KALAIKOVAN | ||
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A software was purchaed one year back. Now the user want to modify and new forms in that software. The software company charged 2,50,000 for that work. That company Charged Service Tax and VAT both on the entire value of the invoice. Service Tax 12.36% on 2,50,000/- VAT/CST 5.61% on 2,50,000/- Doubt : If ST is charged on the entire value, then VAT/CST should be nil? |
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i thing vat should be nil for that matter because he provide services not material supplier that way...
Kamal Kansal
(Chartered Accountant)
(89 Points)
Replied 04 April 2015
It is common practice in software companies that they charge Service Tax as well as VAT on the sale of softwares (because software includes service as well as material element).
But in the above stated case only the service element is included, hence only service tax is applicable on it.
But due to common practice prevalent in software companies to charge both type of taxes on bill, supplier's accountant may inadvertently charge both taxes on the above stated case as well. You must contact with supplier and ask them to amend the bill with service tax only.
Arif Ali
(Apt Co Advisory)
(1230 Points)
Replied 04 April 2015
In your case, only service tax will apply, here VAT will not be charged. you need to contact with service provider company.
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