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IT support & maintenance services are to be classified in code 99831

IT support & Maintenance services are to be classified in code 99831
Recently AAR gave an important ruling dated  19th September 2019, regarding classification of service code under GST on supply  of IT support & maintenance service in a case of GDC Dimension Data (P.) Ltd. [2019] 110 taxmann.com 228 (AAR - KARNATAKA) which is discussed as below:

Facts of the case
  • The applicant is a 100% subsidiary of Dimension Data Asia Pacific Pte Ltd (DDAPPL) based in Singapore. The applicant is engaged in providing various  IT Technical and Support Services and IT Managed Services to its group entities located outside India.
  • The Support services  include the support of software products and also hardware products. Some of the plans include support of the entire infrastructure (especially Pro-active support services). The Managed Services are related to the management of Data Centres, Storage infrastructures, Networks and Communication infrastructures. These services also remotely manage security systems or provide security related services provision of day-to-day management and operation of a client’s computer system.
Issue Involved
  • What is the correct Service Accounting Code (SAC) for the IT Support Services and IT Managed Services?
Ruling/Observation
  • Contract of above mention services is common contract for maintenance of hardware and software and hence is directly related to the Group related to “information technology services” and hence is covered under the Group 99831.
  • The applicant is also providing a package of maintenance of the hardware and software of the recipient and they are not involved in the actual production of the products of the recipient. This would mean that the applicant is providing support services which are technical in nature and hence such support operations of the applicant squarely falls under the Service Code 998313.
  • The Service Code 998316 includes i. managing and monitoring a client’s IT infrastructure including hardware, software and networks;ii. managing and monitoring communication networks and connected hardware to diagnose networking problems and gather capacity and usage statistics for the administration and fine-tuning of network traffic. Hence managed services offered by the applicant fall under the service code 998316.

Please click here for Ruling.

Comments

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