This article summarizes the recent Service Tax Notifications dated 21 December 2010 issued by the GOI including the withdrawal of exemption from payment of service tax under ‘information technology software service’ for import of single user canned or packaged software or domestic sale of canned or packaged software.

Exemption to canned or packaged software

  • The GOI vide Notification No. 2/ 2010– ST dated 27 February 2010 had exempted the taxable service of transfer of right to use for commercial exploitation for canned or package software intended for single use provided that the document granting right to use is packed with the software and the manufacturer or duplicator or copyright holder has paid excise duty on the entire amount and that the manufacturer, duplicator or copyright holder (Withdrawn w.e.f. 21 December 2010 – Notification 51/2010-ST)
  • The GOI vide Notification No. 17/ 2010–ST dated 26 February 2010 had exempted the taxable service of transfer of right to use for commercial exploitation for canned or package software intended for single use provided that the document granting right to use is packed with the software and the importer has paid the customs duty on the entire amount paid to the buyer (Withdrawn w. e.f 21 December 2010 – Notification 52/2010-ST)
  • The GOI vide Notification No. 53/2010 –ST dated 21 December 2010 has exempted the taxable service of transfer of right to use for commercial exploitation for canned or packaged software subject to the following:

– The value of such domestic or imported software for determination of excise duty or additional customs duty should be as per section 4A of the Central Excise Act, 1944 (maximum retail price)

– The appropriate excise duty on the value determined should have been paid by the manufacturer, duplicator or the person holding the copyright to such software

– The appropriate customs duty on the value determined should have been paid by the importer

– The service provider makes a declaration on the invoice that no amount in excess of the retail price has been recovered from the customer

  • Exemption from additional customs duty under Notification 31/2010-Cus dated 27 February 2010, on consideration paid for the grant of right to use for commercial exploitation of software withdrawn w.e.f. 21 December 2010.
  • Exemption from excise duty under Notification 17/2010-CE (NT) dated 27 February 2010, on consideration paid for the grant of right to use for commercial exploitation of software withdrawn w.e.f. 21 December 2010.

Exemption to repair of bridges and tunnels

The exemption from payment of service tax under the management, maintenance or repair service when the service was provided in relation to management, maintenance or repair of roads has been w.e.f 21 December 2010 extended to management, maintenance or repair of bridges, tunnels, dams, airports, railways and transport terminals.`

Extension of exemption to transportation by railways

  • The GOI seeks to exempt from payment of service tax the taxable service of transport of goods by rail when provided in relation to certain specified goods vide Notification No. 8/2010 dated 27 February 2010.
  • The date from which the above notification will come into force has been extended from January 2011 to April 2011.

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