Tds

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

16 May 2013 I have purchased a new software Tally ERP9 to Tally ERP 9 Gold, we have received tax invoice including Service tax can i deduct the TDS @ 2% ??

Ganeshbabu K

Ganeshbabu K (Expert)
Follow

16 May 2013 Please refer this notification,

NOTIFICATION NO. 21/2012 [F.No.142/10/2012-SO(TPL)] S.O. 1323(E), DATED 13-6-2012

In exercise of the powers conferred by sub-section(1F) of section 197A of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby notifies that no deduction of tax shall be made on the following specified payment under section 194J of the Act, namely:-

Payment by a person (hereafter referred to as the transferee) for acquisition of software from another person, being a resident, (hereafter referred to as the transferor), where-

(i) the software is acquired in a subsequent transfer and the transferor has transferred the software without any modification,

(ii) tax has been deducted-

(a) under section 194J on payment for any previous transfer of such software; or

(b) under section 195 on payment for any previous transfer of such software from a non-resident, and

(iii) the transferee obtains a declaration from the transferor that the tax has been deducted either under sub-clause (a) or (b) of clause (ii) along with the Permanent Account Number of the transferor.

2. This notification shall come in to force from the 1st day of July, 2012.

Querist : Anonymous

Querist : Anonymous (Querist)

16 May 2013 Dear Sir,

we have purchased the same for company ?

Ganeshbabu K

Ganeshbabu K (Expert)
Follow

16 May 2013 no tds is applicable if you are making payment to resident person,

(and the software should be branded software (means software trasnfered with out any modifications,)

as it is tally and it is a packaged software so TDS is not applicable

Ganeshbabu K

Ganeshbabu K (Expert)
Follow

16 May 2013 Please refer this one more note which may clarifies u more on this

I. When benefit of notification available –
The CBDT has issued a Notification No. SO 1323 (E), dated 13-06-2012, that no deduction of tax at source shall be made from payment made for acquisition of software, if following conditions are satisfied:

(1) Payment is made by a person ("transferee") for acquisition of software;

(2) Payment is made to another person ("transferor");

(3) The transferor is a resident person;

(4) The software is acquired in subsequent transfer. In other words, the transferor should not be the original developer of the software and it must have acquired the same either from the original developer (from within India or outside India) or through a chain of dealers (from within India or outside India);

(5) The transferor has transferred the software without any modification i.e. branded software, etc. (If transferor is customizing the software as per customers' requirement i.e. unbranded software etc., the benefit of such notification would not be available);

(6) Tax has been deducted by transferor from payment of such software during any previous transfer under section 194J (payment to a resident) or section 195 (payment to a non-resident). In other words, the transferor should have deducted tax from payment made to the original developer or previous dealer, from whom such software was acquired; and

(7) The transferee obtains a declaration from the transferor that it has deducted tax from payment made to original developer or previous dealer (as discussed in point
6).

II. Fallacies in availing benefit of above said exemption –

(1) The benefit of above notification would not be available if payment is made for software which is a specialized one and exclusively custom-made to cater to the needs of an individual client. These are typically referred to as "unbranded software";

(2) The exemption from tax deduction would be available only if software is standardized and marketed such as Windows etc. These are referred to as "branded software" or "off -the shelf software" or "shrink wrapped software";

(3) If transferor has taken benefit of favourable judgments for non-deduction of tax at source from payment made to original developers or dealers, the transferees would be under obligation to deduct tax at source from payment made to the transferor.

(4) If Indian customer buys software from a non-resident dealer for his user, he would be under obligation to deduct the tax, as benefit of such notification would be available only if payment is made to a resident transferor.

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now