Negative list-based service tax: Issues & wish list for Budget
One of the biggest issues requiring clarity is the scope and ambit of the phrase “Online information and database access or retrieval services”. The bone of contention arises from the fact that under the Place of Provision of Service Rules, 2012, the place of provision of services qualifying as “Online….” would be the location of the service provider. This is of immense significance for various intellectual property-related services provided from outside India – if such services qualify as “Online….” the ‘place of provision’ of the said services would be the location of the service provider outside India and thus be outside the service tax net. One of the most typical transactions that can benefit from the above is a transaction of download of software under a EULA by an Indian customer from a service provider outside India. The fact that ‘software’ qualifies as ‘information’ under the Information Technology Act, 2000, strengthens the argument that such services should qualify as “Online….” services and avail the benefit of no service tax. The doubt gets aggravated because of the use of
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