Reselling SW becomes cheaper

In a landmark decision, the commissioner for VAT in Delhi has passed an
order, which is likely to help the software reseller community, to pay only four
percent tax under Delhi value added tax act. This is in stark contrast to the
12.5 percent VAT being charged from software resellers in different states of
the country today.

“This is a good move and all the software resellers in Delhi are eventually
going to gain from this. This also highlights the importance of taking these
issues seriously with the government as well as with the concerned distributor.
Eventually we are paying 12.5 percent VAT to the distributor. However,
distributors say that it is our responsibility to clear things on the VAT front,”
informed, Alok Gupta, CEO, New Delhi-based Softmart Solutions.

On the other hand, software resellers in states like West Bengal are still
paying 12.5 percent VAT. “We are paying 12.5 percent VAT for software today.
We have taken up this matter with different national distributors but they have
not offered any help to us. Now we want to stand up against this and take this
issue up with the government. We will speak with the IT secretary here and than
take up the issue with our association as well,” explained Hemant Chabria,
CEO, Kolkata-based Chabria Infotech.

There are only a few states like Andhra Pradesh and Gujarat who have already
issued orders to take only four percent VAT while other states like West Bengal
are charging 12.5 percent VAT.

This is creating a situation where certain states are becoming preferred
destinations for the purpose of billing, while other states are just loosing it.
“If I am paying only four percent VAT in Delhi why should I bill my products
in Indore or Chandigarh? So a number of people have got multiple billing
locations to solve this issue. Eventually the states with higher VAT are loosing
money because of this problem,” informed a software reseller.

Industry experts feel that this court order by Delhi VAT commissioner is
likely to have snowballing effect and more software resellers in other states
like UP, Bihar, Karnataka or Maharashtra are likely to stand up against paying
12.5 percent VAT.

Zia Askari