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TDS on contact of Software Development

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Querist : Anonymous

Querist : Anonymous (Querist)

21 July 2011 Dear Sir,

Suppose x receives an order for software development by y and X places the order for the same work to Z.

In this case we (Z) bill to X and X bill to Y with service tax 10.30% plus their margin.

If payment will be processed on back to back basis then Please suggest us, what tds head will be applicable?

It should be under contract or professional/ Technical services.

Please suggest.....

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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21 July 2011 Computer Software Development is not covered aunder the definition of profession. However, it is referred as business while allowing exemption under Section 10A and other Sections.

You can deduct TDS U/s 194C by taking a plea that the software development requires the idea and specification from the client and it is accordingly developed.

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