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SERVICE TAX EXEMPTION TO PACKAGED / CUSTOMIZED SOFTWARE

Service Tax - By: - Dr. Sanjiv Agarwal - Dated:- 22-6-2016 - Presently, software in India is subject to levy of multiple taxes in the form of Central Excise, Customs duty, Service Tax and Value added tax (VAT) as follows - Pre-packaged software is goods and leviable to Excise duty (Customs duties, if imported), subject to exemptions available if any (presently, packaged software is included in the Third Schedule to the Central Excise Act and liable to duty of excise on the basis of their Retail .....

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f Excise Duty, Customs Duty and Service Tax by way of Notification Nos. 11/2016-ST, 11/2016-CE and 11/2016-CU, all dated 01.03.2016. Notification No. 14/2011-C.E. dated 1-3-2011 provide for exemption from payment of excise duty on packaged software if such packaged software is not required to be affixed with RSP under Legal Metrology Act / Rules, on a value attributable to consideration for licensing such packaged software. Similar exemption is available for CVD also, under Notification No. 25/2 .....

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-C.E. for central excise and vide Notification No. 11/2016-CU dated 1-3-2016, superseding Notification No. 25/2011-CU for CVD. It is now legally permissible to split the value of goods and service in case of any software and pay Excise Duty (wherever applicable) and Service Tax on such respective values. Vide Notification No. 11/2016-S.T. dated 1-3-2016, it has been provided that when Excise duty is paid on domestically manufactured software on the basis their RSP, as per Section 4A of the Centr .....

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e basis of RSP, if RSP is required to be affixed under Legal Metrology Act / Rules. If imported in India, pay CVD on the basis of RSP, if RSP is required to be affixed under Legal Metrology Act / Rules. If packaged software is sold, there is no Service Tax liability but appropriate VAT /CST has to be paid. If packaged software on which Excise duty / CVD is paid on the basis of Section 4A , is not sold, but only licensed, no Service Tax is payable as per Notification No. 11 /2016-S.T. dated 1-3-2 .....

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ured in India, Excise duty is exempted vide S. No. 266 of Notification No. 12/2012-C.E.) . If imported in India, no CVD is payable in view of the exemption. If the software is sold, there is no Service Tax liability but appropriate VAT /CST has to be paid. If such software is not sold but only licensed, Service Tax will apply and the value can be apportioned between the 'goods' part and 'service' part and Service Tax can be paid on the value attributable to service. There would b .....

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