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.