TDS APPLICABILITY ON FOREIGN PURCHASE

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A UK software trading company is asking about their obligation to deduct Tax Deducted at Source (TDS) when purchasing software from outside India. The consensus is that TDS is applicable under Section 195 at a rate of 10%, provided the foreign supplier has a PAN card. The TDS should be deducted on the payment date, not the bill date, especially when payment is made later and the amount may fluctuate due to exchange rates.

MANOHAR P

MANOHAR P (Querist)
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04 November 2020 One of the software trading company purchases software from outside India. Is the company required to deduct TDS on purchase ??. If it will needed, what is the rate and section of TDS ??. The foreign company has PAN Card.
Please guide me.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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04 November 2020 10% TDS applicable under section 195.

MANOHAR P

MANOHAR P (Querist)
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05 November 2020 Thank you sir. I have one more doubt upon deduction, will TDS Deducted on payment date or bill date??. Here, payment will be made on after two months of bill date.
The payment amount might be varied depends on exchange rate.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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05 November 2020 Deduct TDS on payment date.

MANOHAR P

MANOHAR P (Querist)
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05 November 2020 Thank you sir. You are a great poineer.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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05 November 2020 You are welcome.........

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