CBEC issues FAQs on IT Sector, Gems & Jewellery [Read FAQs]

IT Sector

In a set of Frequently Asked Questions (FAQs), the Central Board of Excise and Customs (CBEC) clarified a number of queries on IT Sector, Gems & Jewellery.

Regarding the treatment of software under the GST regime, it said that in terms of Schedule II of the CGST Act 2017, development, design, programming, customisation, adaptation, upgradation, enhancement, implementation of information technology software and temporary transfer or permitting the use or enjoyment of any intellectual property right are treated as services.

“But, if a pre-developed or pre-designed software is supplied in any medium/storage (commonly bought off-the-shelf) or made available through the use of encryption keys, the same is treated as a supply of goods classifiable under heading 8523.”

It said that IT services would attract 18 per cent tax under the new tax regime.

With regard to the taxability of export of software services, it said that “Exports and supplies to SEZ units and SEZ developers are zero-rated in GST. Zero-rating effectively means that no tax is payable on exports but the exporter/supplier is entitled to the input tax credit on inputs/input services used in relation to exports.”

It also said that exports made on and after 1st July would be eligible for refund under the GST law.

The Board further clarified that advertising and communication material (banners/hoardings/posters) provided to distributors would be treated as supply if the same was provided for consideration.

Further, the Banks are liable to pay IGST of 3% on all imports of precious metals in addition to the basic customs duty. “IGST paid can be taken as input tax credit by the banks”, it clarified.

Read the full text of the FAQs below.

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