A V Vishal
(Expert) 04 January 2010
IT products or software are liable to 4 percent VAT in case of sale within the State. However, if the goods are sold outside the State then depending upon the type of buyer the rate of tax would be 4 percent or 10 percent. If the buyer purchases the software for resale or use in manufacture then CST is 4 percent. But, if the buyer is an end-user then rate of CST is 10 percent.
Excise Duty notification 6/2006-CE dated 1.3.2006 exempts any customized software (any custom designed software, developed for a specific user or client), other than packaged software or canned software falling under heading 8524 of the First Schedule to the Central Excise Tariff Act, 1985.
For the purpose of the exemption, packaged software or canned software has been defined to mean software developed to meet the needs of a variety of users, and which is intended for sale or capable of being sold, off the shelf. Examples of canned software would be Windows, MS Office etc. Packaged software or canned software is liable to excise duty of eight percent.