All software transactions will be uniformly taxed at 18% GST rate

Government has in a recent notifications clarified that all software transactions will be uniformly taxed at 18% GST rate. This includes software services, supplies on media or temporary transfer of IP.  Please find attached the relevant notification providing the rate applicable on Temporary or permanent transfer or permitting the use or enjoyment of Intellectual Property (IP) right in respect of Information Technology software  [S.No. 17(ii)]


While, Industry request for a 12% GST on software supplies has not been accepted by the council so far, the clarification does address NASSCOM’s perpetual request for an end to ambiguity in tax rates on software and associated disputes, in light of the dual levies and resultant high tax rates under the previous IDT regime. While there is an increase in tax rate from the current service tax rate, the uniform GST rate will provide relief to companies who were suffering dual levies amounting to over 20% indirect tax on supplies.


We will keep you posted with further developments. Do write back to us with your feedback.

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