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TDS ON SOFTWARE PURCHASE

FINANCE MANAGER


Dear All,

Is the TDS U/ 194-J applicable on the amount of the purchase of  computer sofware?

According to Section 194-J, Payment of royalty is covered under this section, and on that amount TDS is applicable.

Section 9(1)(vi) define that the meaning of the royalty, but i want a detail, that TDS is applicable on the amount of the computer software purchase.

Bhavin Shah

 

 
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FINANCE MANAGER


Originally posted by :BHAVIN SHAH
" Dear All,
Is the TDS U/ 194-J applicable on the amount of the purchase of  computer sofware?
According to Section 194-J, Payment of royalty is covered under this section, and on that amount TDS is applicable.
Section 9(1)(vi) define that the meaning of the royalty, but i want a detail, that TDS is applicable on the amount of the computer software purchase.
Bhavin Shah
 
"


 

 
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Financial Executive


Dear Member!

 

You have stated that you have purchased a software for use and it appears that it is not a package specially developed to address your requirements in which case it is a contractual obligation on the part of the supplier and the same is liable for TDS under Section 194J being professional services rendered.

 

Normally, in the case of any software only the license is given for the use of the software. It has been clarified by the Supreme Court of India, in the case of TCS V State of Andhra Pradesh (2004) 271 ITR 401 (SC) that granting of such licenses for th use of software is in the nature of a payment for a copyright. Just as a printed book is a copyrighted article, a standard software i.e Shrink wrapped software (though may be modified) is only a goods liable for sales tax. In such a transaction, the primary object of the transaction and intention of the parties, is to avail of an article for use.

 

Therefore, no TDS liability arise in your case.

 

Good Bye! Cheers!!


Total thanks : 1 times

 
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Article Clerk


But what if the software licence is purchased and it is expensed out then whether TDS will be applicable?

 

 
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manager finance


no tds u/s194j

 
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Please do tell me what will be the TDS implication, If the vendor charged both service tax & vat on invoice raised by him for sale of software. Please quote relevant case law also, if any.

 
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