SaaS (Software as a Service) is model that offers a means whereby software may be used by a person without acquiring / purchasing it. Ordinarily, SaaS is understood as a subscription-based model where the software is hosted in the cloud and accessed through the internet. In other words, a SaaS model offers the right to use a software, without acquiring it. Therefore, by virtue of Schedule II of the CGST Act, 2017, the supply would be treated as a supply of services. The relevant entries would fall under the head Licensing services for the right to use intellectual property and similar products, attracting tax at 18%. The 6-digit code may be determined based on the description provided in the scheme of classification of services.
The two most relevant entries are reproduced below:
|997331||Licensing services for the right to use computer software and databases;|
|997339||Licensing services for the right to use other intellectual property products and other resources nowhere else classified|