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Taxes on software/license purchases

Apourv (Others) (29 Points)

05 September 2014

I work as a procurement officer in BPCL.

I want to understand what taxes are applicable on software and software license purchase.

Here is what I know till now.--

1) If the software/license is a packaged one (for general use), then only sales tax is applicable.

2) If the software is made for specific purpose for the company (say BPCL) then it attracts sales tax as well as service tax, because of the man hours invested in the making of the software for that specific purpose.

Please tell me what about excise duty on softwares. Is it applicable. Or is it service tax in place of ED? Please explain.

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2 Replies

Harshal Fifadra (Chartered Accountant) (1489 Points)
Replied 05 September 2014

Point 1 is correct . Point 2 is also correct. As per central excise rules , where excise duty is applicable service tax is not applicable and vice versa.

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Apourv (Others) (29 Points)
Replied 05 September 2014

What are the taxes applicable when there is a license renewal, either of a packaged S/W or of a custom S/W? I've read that license renewal is treated as service, but I am told by an 35yr experienced procurement officer, who btw, was also an auditor, who fortunately happens to be my boss, that license renewal was and is treated as supply...