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Information Technology Software Services
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Prior to 1-7-2012, taxable service in relation to information technology service was defined in erstwhile section 65(105)(zzzze). The definition of taxable service included practically all the services which are provided in connection with information technology software. The word information technology software was defined in erstwhile section 65B(28).
With effect from 1-7-2012, clause (d) of section 66E specifies major services relating to information technology software as taxable service. The definition of ‘service’ as given in section 65B(44) is very wide and it covers all the services provided in relation to information technology service even if they have not been specified in clause (d) of section 66E.
Section 65B(28): “Information Technology Software” means any representation of instructions, 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”.
The key ingredients of the definition are as under:
There is representation of instruction, data, sound or image, including source code and object code.
These are recorded in a machine readable form.
These are 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.
Such services are in relation to
Development,
Design,
Programming,
Customization,
Adaption,
Up-gradation,
Enhancement,
Implementation of information technology.
Software is a term for a set of instructions, which makes a computer to perform a task. The set of instructions are commonly known as a program, without which computers cannot do any operations. A software is classified broadly into two groups, application software, which includes normal utility applications like Microsoft word, power point, etc., that interacts and performs user specific tasks and systems software, such as operating systems, which interacts directly with hardware to make the system work and also provides a platform for other applications to work.
General Exemption
Small Service Provider
Vide Notification No 33/2012-ST, dated 20.06.2012 – Exemption to Small service providers having taxable turnover of less than 10 Lakhs and providing services other than by way of under a brand name.
Import of Technology
Vide Notification No. 14/ 2012-ST, dated March 17, 2012 – Exemption in respect of Taxable service involving import of technology, from so much of service tax, as is equivalent to the extent of amount of R&D Cess payable on the said transfer of technology under the provisions of section 3 of the Research and Development Cess Act, 1986.
To Foreign Diplomatic missions and their personnel
Vide Notification No 27/2012-ST, dated 20.06.2012 – Exemption for all the taxable services provided by any person, for the official use of a foreign diplomatic mission or consular post in India, or for personal use or for the use of the family members of diplomatic agents or career consular officers posted therein.
Services by TBI or STEP
Vide Notification No 32/2012-ST, dated 20.06.2012 – All taxable services provided by TBI or STEP have been exempted
Services provided to SEZ
Vide Notification No 40/2012-ST, dated 20.06.2012, all taxable services received by a Unit located in a Special Economic Zone (SEZ) or Developer of SEZ for the authorized operations, has been exempted from the levy of whole of the service tax.
Specific Exemptions
Notification No. 25/2012-ST dated 20-6-2012 grants exemption to various services specified therein. None of the item in the said notification relates to information technology software services.
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