TDS applicability in case of software payments to a foreign company
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03 May 2025
One of my client is a Marketing agency based in India only he is liable for tax audit and paying 1.5 lakhs monthly for subscription fee to a software company based in US California. The foreign company has no Permanent establishment and PAN in India, what will be the TDS implications on such transactions?
Will filing form 10F and obtaining TRC from Foreign company will suffice for not deducting tds on this transaction?
Will filing form 10F and obtaining TRC from Foreign company will suffice for not deducting tds on this transaction?
03 May 2025
TDS not applicable being non resident company.
Yes, obtain TRC.
Yes, obtain TRC.
03 May 2025
Thankyou for your reply sir, but won't it be applicable u/s 195 as foreign companies are also covered in it?
03 May 2025
Section 195 TDS applicable in case of interest, dividend, royalty and fees for technical services and in case of income taxable in india.
03 May 2025
Sir, the payment of subscription fee to a software company won't be covered under technical services?
03 May 2025
It won't be covered.
See the link.
https://www.scconline.com/blog/post/2024/02/28/del-hc-subscription-fee-income-not-classified-royalties-included-services-dtaa-and-income-tax-act-legal-news-scctimes/
See the link.
https://www.scconline.com/blog/post/2024/02/28/del-hc-subscription-fee-income-not-classified-royalties-included-services-dtaa-and-income-tax-act-legal-news-scctimes/
03 May 2025
Thank you so much sir for the solution.
03 May 2025
You are welcome...
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