No One Killed Jessica

Before you again start

wondering what a movie or a song title is doing in DQ Week for

the second time in as many weeks, let me assure you the header is

again a metaphor. Jessica here represents the Indian software market

and the bullet that killed Jessica Lall is the vexatious software

double taxation issue. The various protagonists like the government,

the software vendors, the large national distributors, the resellers

and the partners are different entities accused of the murder at

various times, but who are not only in a self-denial mode but more

interested in passing the buck amongst each other.

Though the government has

recently come up with certain guidelines, it has further opened up a

Pandora's box instead of solving the challenges. While ISODA

representing the resellers and partners is claiming that its stand

all along on software double taxation is now vindicated following

different legal rulings and now the government notification, it feels

the onus now rests with the national distributors and the software

vendors. However, both these entities are dithering to take a stand

first; it's a wait and watch policy on who will take the first call

on this issue. Meanwhile, let the bullet (read double taxation) kill

Jessica (software market); who cares, as long as I have not killed

her.

Till now, the distributors

have not yet decided what to do. They are still contemplating on what

stand do they take, whether they should go for CVD or go back to

service tax route. Currently, they are facing the problem of defining

the MRP of the software product, as this is possible only in retail

boxes. For malls and paper licenses, they have not been able to

define for the simple reason that the price changes depend upon the

quantity. The likes of Ingram Micro, Redington and Rashi are yet to

take a call on this issue. Jessica will die multiple deaths by the

time they are ready to do so.

Vendors like Microsoft and

Adobe are also stuck on the status quo. The situation now calls for a

policy decision on the behalf of principals, who do not have MRP

pricing on their licenses. Besides, there are three modes of delivery

for the same product and the price of MRP is going to change for

these three. And they have to convince government on it and that is

where the problem is coming from. There is bound to be the difference

as principal is not able to define the MRP and they will not take the

risk of clearing the shipment. Till vendors clearly assert their

positions, we can never save Jessica from certain demise.

Notification

notwithstanding, the government too cannot wash its hands off

Jessica's blood. In fact, many feel the notification is hardly going

to make any difference in taxation as far as customs duty or service

tax is concerned. Therefore it may not bring any change in the

pricing of the product in the market. The government has in fact

categorized software into different products. Some are called only

license to use or paper license, some come under single pack and it

is available off the shelf, and the third one is multi-user product,

which is again available off the shelf. Virtually, government has

created these categories for software and if you look at the taxation

part, it is more or less same.

Somewhere, they might be

subject to customs duty or service tax. It is known fact that there

will be either customs duty or service tax. Even the rate of customs

duty (CVD) and service tax is same, ie 10.3 percent. The only

difference here is that the products that are sold off the shelf,

customs duty on those products is levied on MPR-based price. So, that

product might be little costlier, may half to one percent. There

would be marginal difference when the product would be charged to

duty at MRP base. The remaining products are being sold or imported

by either paying customs duty or service tax. Wake up, Pranab babu,

or it might be you, who will finally kill Jessica.