Information Technology Software Services – Taxable?

Information Technology Software Services“Information technology software”means any representation of instruction, data, sound or image, including source code and object code, recorded in a machine readable form, and capable of being manipulated or providing interactivity to a user, by means of a computer or an automatic data processing machine or any other device or equipment.

 Date from which such service is taxable16th May, 2008

 Here, Service provider –  Any Person

 Service receiver –  Any Person

 Scope of taxable services

Any service provided or to be provided to any person, by any other person in relation to information technology software, including –

a)      Development of information technology services

b)      Study, analysis, design and programming of information technology software

c)      Adaptation, up gradation, enhancement, implementation and other similar services related to information technology services.

d)     Providing the right to use information technology software for commercial exploitation including right to reproduce, distribute and sell information technology software and right to use software components for the creation of and inclusion in other information technology software products.

e)      Providing the right to use information technology software supplied electronically.

f)       Providing advice, consultancy and assistance on matters related to information technology software, including conducting feasibility studies on implementation of a system, specifications for a database design, guidance and assistance during the start-up phase of a new system, specifications to secure a database, advise on proprietary information technology software.


Exemptions to right to use the packaged/canned software subject to certain specified conditions –  

The taxable service of providing the right to use the packaged/ canned software, pre-packed in retail packages intended for single use has been exempted from the service tax under ‘information technology software’ subject to the following conditions:

  i.   The document providing the right to use software is packed along with the software.

  ii.   a) In case of import: the importer has paid the custom duty on the entire amount received from the buyer.

       b) In case of domestic production: the manufacturer/ duplicator/ the person holding the copyright to software has paid the excise duty on the entire amount received from the buyer.

  iii.   The benefit under the following notifications has not been availed:

  •   Notification No. 17/2010 CE dated 27.02.2010
  •   Notification No. 31/ 2010 Cus dated 27.02.2010





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