Q 1. Whether software is regarded as goods or services in GST?
In terms of Schedule II of the CGST Act 2017, development, design, programming, customization, adaptation, up gradation, enhancement, implementation of information technology software and temporary transfer or permitting the use or enjoyment of any intellectual property right is 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.
Q 2. What are the implications of recognizing the development, design, programming, customization, adaptation, up gradation, enhancement, and implementation of information technology software as a service?
Ans. - The primary implication is that the place of supply rules applicable to services would apply in determining the taxability of the supply of software services. The same would be applicable in situations of supply of services involving a temporary transfer or permitting the use or enjoyment of any intellectual property right. The other implication is that the supplier of software services would not be eligible for the composition scheme.