Tds on purchase of software?

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SANJAY (Querist)
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03 May 2012 Please guide me that whether TDS is applicable on Purchase of Software (i.e. Tally ERP). As the Invoice bill of Tally Solutions is as under:
Software (Tally ERP) Cost = Rs.50000/-
Service Tax @ 12.36%=Rs.6180/-
Central Sales Tax @ 5% On (50000+6180) =Rs.2809/-
Total = 58989/-
I also want to know why the CST charged on Service tax? Whether co. can charge the tax on tax?
Please reply soon as its urgent??
Thanks in advance..

Sumti Bhadani

Sumti Bhadani (Expert)
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03 May 2012 TDS is not applicable on purchase of software.

SANJAY

SANJAY (Querist)
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03 May 2012 But why he is charging service tax?? And is Tax on Tax is right?? If TDS is not applicable, can you please give it to me in written?

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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03 May 2012 An amendment in Section 9 in Finance Bill 2012 is likely to be made effective and Explanation 5 is being inserted for "removal of doubt" in this respect.
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It is considered as Royalty. 194J will be applicable.
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I do not have any view about , why CST ????
but can say, TDS to be deducted to on the entire invoice amount.

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Guest

Guest (Expert)

03 May 2012 All that v can do is to clear it frm vendor as why cst is charged on d full amt incl service tax. I have come across such cases involving vat nd ST and askd d vendor to change d invoice.

umesh varma

umesh varma (Expert)
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04 May 2012 Basically TDS is deducted where any service is provided and therefore the service tax @ 12.36% is levied also. But CST is applicable where any item is deleivered and hence according to me CST or VAT is not applicable.This also has to be cheked in the light of Item being deleivered to the parties.

CA.Pankaj Dubey

CA.Pankaj Dubey (Expert)
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04 May 2012 Dear Sanjay,

TDS is not applicable in case of purchase of Computer software.

Charging of service tax is not the only reason for deducting TDS, it is the nature which need to be taken care at the time of TDS applicability.

SANJAY

SANJAY (Querist)
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04 May 2012 Dear Pankaj,

As per Sec 194J TDS is to be deducted on puchase of software as it comes under Royalty as defined in sec 9(1)(VI).

I think Paras Bafna sir is right..
Thanks sir.

CA.Pankaj Dubey

CA.Pankaj Dubey (Expert)
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04 May 2012 Dear Sanjay,

For fixed assets classification, computer include computer software.

and TDS is not require to pay on purchase of Fixed assets.

SANJAY

SANJAY (Querist)
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05 May 2012 But Dear pankaj,

If the licence of the software is expired in one year then why should i booked it in fixed assets. because i have to renew the licence in next year again.

Please correct me if i m wrong...