Thursday, September 08, 2005
If you brand and market your software in the public bazaar, you will attract attention- and then some sales tax.
A 2005 judgement of the Supreme Court of India has held that "off the shelf" software attracts sales tax. On desktops or discs, if marketed to the public, there's sales tax to be paid.
So what is not "off the shelf" software? It is software that is customized, and "tailor-made according to the customer's particular requirements." (Congratulations if you got that right.) Think software solutions that require "specs" from the client. The Supreme Court also used the term "unbranded" to describe this kind of software. Having said so, the apex Court refrained from ruling about sales tax liabilities of unbranded software.
In any case, designing the transfer of software as a licence and not a sale may make a difference. To use the two favorite words of lawyers- "it depends."