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 United we stand, divided we fall
By Dhaval Valia
The issue of whether packaged software is a service or not has emerged as the biggest pain-point for IT channels over the last 15 months.
Resellers are blaming distributors, and vendors. Vendors are blaming the government and distributors. Distributors are blaming resellers and vendors. But to me, the blame lies with all of them.
Central Government
, for years, treated packaged software as goods and levied CST and VAT. But then it abruptly reclassified packaged software as a service—through a notification that wasn’t clearly worded—thus leaving it open to interpretation.
State Governments
ignored the central government’s notification. Reason? Reclassification of packaged software as a service would mean that they couldn’t charge VAT. Hence, they decided to play dumb by saying that they had received no such intimation.
Software Vendors’
common refrain on the matter has been: “We are non-resident entities. The import and distribution of software is done by our distributors. We can’t tell them how to run their business.” Technically, this is true as most software vendors don’t bill locally. But the argument sounds absurd when you consider that distributors and resellers are selling the vendors’ products. So how can they wash their hands off the issue? But that’s exactly what they have done. Despite several attempts by CRN, not a single vendor has spoken on record.
Distributors
have been the most vilified by resellers. While there are reasons to blame them, one also needs to bear in mind that they are only importers and logistics providers for software companies. Yet they can’t be absolved of the responsibility of preserving their customers’ (resellers’) interests. Each distributor has interpreted the new tax law in its own way instead of coming together and deciding on a common approach.
Resellers
have been playing the victim and blaming everyone else rather than putting their house in order first. One wonders why most resellers have not acquired a certificate for lower TDS by customers. Only 16 percent of the 70 ISODA members polled have acquired the certificate in fifteen long months. If resellers had got the certificate earlier, it would have provided much relief to their cash flow issues.
This is not to discredit ISODA’s efforts, which has done a commendable job in taking the issue up with all stake holders. They have tried their best to get everyone together to find a solution.
However, as always, we have yet again failed to rise to the occasion. Instead, we have wasted our time in playing the blame game. Not realizing the popular adage: United we stand, divided we fall.
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