LinuxLingam wrote:
> hi all,
>
> a colleague raised an important issue.
>
> excise is levied on products manufactured in india.
> customs is levied on products not manufactured, and hence
> imported into india.
Customs may be levied on services as well, and may be levied on
exports as well. The word derives from the "customary right" of the
English king to tax wool exports.
> thus, the colleague says, software developed in india and sold
> in india may get an excise tax levied on it.
No. Software is a service, according to the tax manual. No excise is
levied on services.
> and software not developed in india, but imported and sold into
> india, may get a customs duty charged on it.
Yes, may be assesed for Cistoms, but not for CVD, which is to
compensate for excise.
> well, what about, say, popular operating systems and desktop
> and database applications "developed on an 100% exports basis
> in india" for a parent firm abroad, and then sold in india as a
> desktop or OS package?
No excise. If developed by an 100%EOU, and sold in the DTA (Domestic
Tarrif Area), may attract penalties, or may be allowed upto 15% of
total sales on payment of Customs. This is what the STP scheme was
all about.
> what about that special case where the
> software may be developed across teams around the world, and
> for the local indian market, a CD duplication plant creates
> packages for the indian market? yet the parent group is
> headquartered abroad?
I fail to see the problem. Excise will be levied on the CD Media
leaving the factory gate. The parentage of the company does not
affect, in general, its tax status.
> my my my, what a can of spaghetti mixed with daal and chawal !
LL, there is no confusion. Really. May I direct you to the Central
Excise Manual, Chapter 1:
1.2 The Central Excise duty is levied in terms of the Central Excise
Act, 1944 and the rates of duty, ad valorem or specific, are
prescribed under the Schedule I and II of the Central Excise Tariff
Act, 1985. The taxable event under the Central Excise law is
'manufacture' and the liability of Central Excise duty arises as soon
as the goods are manufactured. The Central Excise Officers are also
entrusted to collect other types of duties levied under Additional
Duties (Goods of Special Importance) Act, Additional Duties (Textiles
and Textiles Articles) Act, Cess etc.
Software is not manufactured, hence the entire issue of Excise on it
does not arise. Period. Finis.
The current clarification is simply to put into law what the CBDT and
Appelate Tribunals have held for some time.
--
Sanjeev Gupta
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