Amount paid on purchase of dynamic software

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Apeksha (Querist)
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18 March 2017 Our company purchased dynamic software of Rs.6,25,000.00 and Dynamic software company charged service tax on it, so please guide us dynamic software purchased by our company is capital expendiure or revenue in nature? And if
1) Capital in nature - What is the rate of depreciation 60% or 25% and require to deduct TDS on such amount or not? Or if
2) Revenue in nature - Under which section require to deduct TDS?

CA Shubhanshu Jain

CA Shubhanshu Jain (Expert)
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18 March 2017 As per provisions of income tax act, payment made towards software purchase is treated as royalty and allowed as REVENUE expenditure. Applicable Rate of TDS is 10%

Apeksha

Apeksha (Querist)
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18 March 2017 Thank you Shubhanshu for reply.
Can you please provide me more detail about this at where i can refer full provision regarding this?

Apeksha

Apeksha (Querist)
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18 March 2017 And What about the implementation charges paid for this software?

CA Shubhanshu Jain

CA Shubhanshu Jain (Expert)
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18 March 2017 For learning more about tds on software purchase refer link given below

https://taxguru.in/income-tax/treatment-amount-paid-purchase-software-income-tax-act-1961.html

Once main expense in revenue in nature, expenses incidental to main expense are also treated as revenue in nature

Apeksha

Apeksha (Querist)
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18 March 2017 Thank you so much Shubhanshu

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