/dqweek/media/agency_attachments/JNb31gQnqJvAm0jqPxaV.png)
Follow UsThe latest notification (Notification
N.
53/2010-Service Tax) from the Ministry of Finance, dated
December 21, 2010states
that
the channel community has to pay either the customs duty and
excise duty at the first stage of import or the service tax at the
later stage.
While clarifying the notification on
behalf of
(Infotech Software Dealers Association), Harinder
Salwan, Secretary General, ISODA, said, “Until now, ISODA had been
seeking clarity from the government on the double taxation confusion.
Now with this notification, the companies have to mention about the
same to the government and at the same time also ensure that they do
not charge customer more.”
He further added, “This whole
confusion was hitting us badly and it was a negative cash flow for
most of the partners and distributors as well. In fact, a lot of
money was blocked with the government. We now expect the distributors
to start immediately charging only VAT-be it on single user box or
multiple user box. Meanwhile, we have already written to the
distributors and informed the principals as well and now waiting for
them to take a stand.” Though its quite early to draw any
conclusion with this notification
DQ Week
still tried to seek clarity from some of the leading
distributors and principals in the country. On the contrary, ISODA
believes that they have won the battle in the sense that the
distributors can't charge double taxation and they just need to sit
down and apply charging only one tax. K Jaishankar, MD of Ingram Micro
India,
said, “After going through the notification, what we have found
that there is still no clarity on how it is going to impact the
taxation of software. We are still studying it and
there
are different views on the implications. Once it is clarified and we
are more clear of what it
meets, we will share it with our channel partners.”
“ISODA might have come to a
conclusion and they are certainly entitled to do so. But as far as
Ingram Micro is concerned, we have found that there are still a
number of gray areas on which we need clarifications. For example,
the notification is not very clear on the inventory that we are
currently carrying and how are we going to cater to it,” added
Jaishankar.
Another national distributor, on the
condition of anonymity, commented that they haven't yet firmed up any
views on this notification. But it looks like some clarity is
definitely emerging. They have yet to conduct internal meetings to
close this. Though the past suggests that there might be some gray
areas that need to be addressed, people around them are saying that
it has come out quite clearly this time. It will take them a day or
two to review it further. Krishna K Choudhary, Founder and
Director, Rashi Peripherals, highlighted, “Yes, we have gone
through this notification. From the legal point of view, Rashi's take
on this issue cannot be different. But you can definitely see that
the amendment that was brought in February this year during the
budget has been withdrawn. The amendment was pertaining to some of
the licenses subject to service tax and some to customs duty. Those
provisions, including the service tax circular have been withdrawn
now.”
“Now,
it seems that everything will be brought under customs duty. The
rate of service tax and customs duty is same at 10.3 percent. But
customs duty would be charged based on the MRP. I think that the
impact on the industry will be negligible. And above all, we won't
see any major impact of this amendment,” opined Choudhary.
For
the principal's perspective, Microsoft couldn't be contacted at the
time of this article going to press. Now, the only issue
pending with the government is the electronic download business,
which according to the rules, is still liable to service tax. This is
the only gray area on which ISODA is seeking clarification from the
government. And once this is done, 100 percent of the channel
business would move out of service tax.
ISODA claims round one
New Update