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Research by Country/Region July 29, 2014  
INDIA: CUSTOMS, TAXES and DOCUMENTATION REQUIREMENTS for IT PRODUCTS and SERVICES IMPORTS
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A. Is this country a member of the Information Technology Agreement?

B. Customs documentation requirements for IT products

C. Software: duties and taxes, updates, licenses, electronically delivered

D. IT services: tax treatment and other regulations

E. Refurbished, used, or repaired computer equipment imports


A. IS THIS COUNTRY A MEMBER OF THE INFORMATION TECHNOLOGY AGREEMENT?
YES. Signatories to the Information Technology Agreement (ITA) have eliminated their import duties on a wide range of information technology products, including software and computer hardware. For more information on the ITA, and exact tariff elimination schedules of signatories, clickhere.
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B. CUSTOMS DOCUMENTATION REQUIREMENTS FOR IT PRODUCTS

What are the documentation requirements for the physical import of software? For other information technology products?
The following documentation is required from the vendor:
- Copy of the Invoice (issued by U.S. vendor)
- House Airway Bill (issued by the consolidator/U.S. vendor)
- Master Airway Bill (Issued by the carrier airline)
- Bank release order (issued by the bankers)
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C. SOFTWARE: DUTIES and TAXES, UPDATES, LICENSES, ELECTRONICALLY DELIVERED

DUTIES AND TAXES ON SOFTWARE IMPORTS

Are duties assessed on the intellectual property of the software or on the medium on which is it presented?
There is no import duty/customs duty on import of software in India. However, if the software is embedded or pre-loaded on equipment, then the value of the software, if invoiced separately, is added to the valuation of the equipment for purposes of customs duty. If not invoiced separately, it would be assumed to be included in the price of the equipment package.

Are taxes assessed on the intellectual property of the software or on the medium on which is it presented?
Taxes are charged on the value declared in the invoice. For example, if the value in the invoice is USD 100, taxes will be levied on the said amount.

Types of taxes: An Excise Duty and a Countervailing Duty (CVD equivalent to the rate of the Excise Duty levied on imports) are levied centrally (by the union or the Federal Government); the current rate is 12.36%.

However, other local taxes, such as sales taxes, are levied by India's 29 states at a particular state's announced rate. Typically, most Indian states levy sales tax on IT products at 4%.

Is customized software treated differently than packaged software?
No.
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IMPORTS OF SOFTWARE UPDATES

What are the customs duties and tax implications for software sold with updates when the full sales price, including cost of updates, is shown on the original commercial invoice? Are duties and taxes paid on that amount? What happens when the updates are sent at a later date? Are duties/taxes applied again? If so, based on what value? How should information presented on the commercial invoice for the original and subsequent shipments to avoid paying duties/taxes more than once on a single sale?
No duty is imposed on import of software or its update.
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SOFTWARE LICENSES: CUSTOMS CLASSIFICATION, IMPORT DUTIES, TAXES, OTHER

Are software licenses classified in Harmonized System 4907?
The HS number for Software Licenses in India is 49070030.

Are import duties/taxes applied? If so, on what cost/price base are they levied?
A software license is treated at par with software and thus is also duty-free.

Are withholding or other additional taxes applied on software licenses? If yes, how?
No-- not applicable.

If a U.S. license agreement is included in the packaging or is part of the installation/registration of shrink-wrapped software imported from the United States, would that agreement be binding on consumers in your market? If so, would U.S. or local laws pertain?
Yes, the U.S. license is recognized and binding in India. U.S. laws would pertain.
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SOFTWARE DELIVERED OVER THE INTERNET/ELECTRONICALLY DELIVERED SOFTWARE

Are taxes applied to software delivered to the end-user over the Internet? If so, on what value?
No taxes are currently levied on software downloaded from the Internet. Recently, as of May 16, the Central Government has proposed to levy a service tax at 12.36% on the development of customized software, or download of all software; the ambiguity in the law does not exclude packaged software, which is already subject to excise duty/CVD from ambit of new service tax levy, giving rise to concern about double taxation.


Would the situation be different if this software were instead delivered to a distributor who has a license to produce (replicate) and sell the software?
India does not currently have a value-added tax (VAT). Software does not attract Excise Duty or a Countervailing Duty. However, certain Indian States charge a Local Sales Tax on sales of software (see above).

What are the documentation requirements for the electronically delivered import of digitized products (i.e. software, movie downloads) over the Internet or other networks?
Currently, no documentation is required.

Must an electronically delivered software import be accompanied by a physical shipment of the same product?
No.
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D. IT SERVICES: TAX TREATMENT AND OTHER REGULATIONS

Are services (i.e. training, set-up, etc) relating to the sale of software taxed? If so, at what rate and based on what value?
Yes, all services, including IT training attract a service tax of 8 percent.

Specifically related to this question, 'information technology service' includes any service in relation to designing, developing or maintaining computer software, or computerized data processing or system networking, or any other service primarily in relation to the operation of computer systems.

Are U.S. IT solution providers permitted to send personnel into the country to set up hardware/software-related systems?
Yes.

Are special visa, work permits, and/or professional certification by an accredited body required?
Yes, Work Permits issued from the Indian Embassy/Consulate in the U.S. are required. However, if a person comes to India on a business/tourist visa and then decides to work, then he/she can apply for a work permit with the Ministry of Home Affairs, Government of India.
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E. REFURBISHED, USED, OR REPAIRED COMPUTER EQUIPMENT IMPORTS

1. REFURBISHED COMPUTER EQUIPMENT
Is the import of refurbished computer hardware, parts, and accessories (including toner cartridges) permitted?
The import of refurbished or second-hand computers and parts is not permitted in India.
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2. USED COMPUTER EQUIPMENT
Is the import of used computer hardware, parts, and accessories (including toner cartridges) permitted?
This is not permitted.
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3. REPAIRED COMPUTER EQUIPMENT
Are duties and taxes assessed on the re-import of repaired computer equipment?
Yes. Import duty is assessed on the cost of repair only provided the same part is returned after repairs, as the serial number is matched. If a replacement is sent (new part), then the import duty is levied on that part, and CVD (tax) is also levied. However, since most repairs are done to equipment that has already been sold/paid for, local taxes (levies) are not charged.

How should the commercial invoice appear?
Like a normal invoice.
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RESPONSE INFORMATION

This response was prepared by the U.S. Department of Commerce/Commercial Service in New Dehli, India, in February and May 2003. For further clarification please contact:
Sandeep Maini
Commercial Specialist
U.S. Embassy, New Delhi
sandeep.maini@mail.doc.gov

Special Notes: The above information is intended to serve only as unofficial guidance. In seeking to obtain government rulings in specific cases, it will often be necessary to refer to special laws, separate regulations and announcements, and case-by-case decisions by the government. Beyond the general guidelines shown above, legal counsel should be retained at an early stage of consummation of a major procurement contract, and before entering into any legal commitments.

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