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Your Microsoft Office 365 Subscription Costs More Than It Used To. Here's Why.

Your Microsoft Office 365 Subscription Costs More Than It Used To. Here's Why.

By Manish Singh | Updated: 3 August 2017 20:00 IST

Highlights

Microsoft's Office 365 now requires you to pay applicable tax
This makes Office 365 costlier than before
Microsoft also increased Office 365 price in India this January

You can add Microsoft's Office 365 to the list of your favourite services that has become costlier in India amid the Indian government's rollout of the Goods and Services Tax (GST).

All the individual consumer-facing Office 365 SKUs: Home, Personal, and Student, are now a little costlier in India, according to invoices reviewed by Gadgets 360. A customer who purchased Office 365 Home from Microsoft's official store, for instance, was required to pay Rs. 4,199 (with no visible taxes) for a yearly subscription of Office 365 last year, a figure that remained unchanged until early-January of this year.

Microsoft later revised the price of this tier in January to Rs. 4,619, a ten percent hike in the pricing. Then in April, Microsoft's official store started to include applicable taxes, which at the time were 15 percent, as required by the government. Those applicable taxes were revised to 18 percent last month, following the rollout of GST by the Indian government, the company confirmed to Gadgets 360.

As a result of this, a yearly-subscription of Office 365 Home now costs Rs. 5,450.40, a nearly 18 percent hike in the price in the expense. Thus overall, after the price increase and following the increase in taxes, the cost of Office 365 Home (and other Office 365 subscriptions) to customers in India has increased by up to 24 percent in the first half of this year. The monthly subscription cost of Office 365 Home, similarly, adds Rs. 82.80 on top of the original sticker price of Rs. 460.

It appears that the issue isn't limited to a surge in prices, but also extends to how Microsoft informed its customers about it. One Office 365 customer, who was surprised to spot the additional charge in the billing last month, was unhappy with the unannounced change. He said the company should have communicated it clearly that it was going to increase the prices.

"Microsoft certainly could have communicated the change in applicable taxes to its existing Office 365 Home subscriber base better," Tushar Kanwar, a Bengaluru-based technology columnist told Gadgets 360.

The price of Office 365 Personal, which currently has a retail price listed as Rs. 3,629 on the website, requires a customer to pay tax worth Rs. 653.22 on the yearly subscription purchase. The monthly subscription, which costs Rs. 360 as per the website, would end up costing customers Rs. 424.80.

Office Home & Student 2016, which is targeted at school and college going audience, similarly requires an additional charge of Rs. 1,241.82, on its listed Rs 6,899.00 yearly sticker price.

"Indian consumers can buy Office 365 subscriptions through many different channels, including Microsoftstore.com where the current price for an Office 365 Home subscription per user per year is Rs. 4619 plus applicable taxes," a Microsoft spokesperson told Gadgets 360. "We periodically assess our prices to align to changing market forces. The price of Office 365 on Microsoftstore.com has not changed since January 2017 when we increased it by 10%."

A chartered accountant explained how software services are impacted with GST. "Rates for purchasing Web-based applications, electronic downloads, charges for use of licensed software, were earlier taxed at 15 percent service tax and these services now fall under the 18 percent GST (residual rate)," Preeti Khurana, a chartered accountant who works with e-filing platform for income tax returns ClearTax told Gadgets 360.

"There is therefore a direct increase of 3 percent in cost for consumers. But it is notable that GST paid on these purchases (made for the purpose of business) can be availed as input credit by the buyer," she added. You can find more about GST in our podcast.

The rollout of GST has impacted several popular services. Citing GST, Apple, for instance, said last month it will be increasing iCloud prices in India. Netflix's prices remain unchanged in India as the company absorbs the tax.

Microsoft services are available through various channels. Several of which, including Amazon India, still continue to sell Office 365 at older prices. So perhaps if you're planning to purchase Office 365 in the coming months, that's something you should keep in mind.

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