Can VAT is calculated on Service Tax for supply of Software?



Rs.100/- cost of software + Rs.12.36 Service Tax = Rs.112.36,
on this amount the supplier is charging VAT @ 4%, Can it be?

Can VAT is calculated on Service Tax for supply of Software?
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2 Replies to “Can VAT is calculated on Service Tax for supply of Software?”

  1. I am also like to ask the same question. however i have been told by somebody that when service tax charged there is no VAT because the software developed as per specifications. If VAT charged there is no Service Tax. According to me VAT may not be charged on Service Tax.


  2. For your knowledge I am clarifying here that both Service Tax and VAT are to be charged on the consideration or price. In your example Service Tax is to be charged on Rs. 100/- as well as VAT is to be charged on Rs. 100/-. So that Service Tax would be Rs. 12.36 and VAT would be Rs. 4/-. I think you are confused with excise because VAT is to be charged on consideration plus excise. But this practice is not for the Service Tax purpose. VAT is not to be charged on Service Tax amount.

    I am an Advocate in Taxation.





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