Tds on payment to non resident company for software purchase
This query is : Resolved
16 March 2015
Indian entity purchasing software through mail from hong kong .
is there need to deduct TDS while making payment to NRI company considering India does not have DTAA with hong kong company and payment is as royalty
- CA Kiran
is there need to deduct TDS while making payment to NRI company considering India does not have DTAA with hong kong company and payment is as royalty
- CA Kiran
16 March 2015
TDS u/s 195 at 25% is applicable.
16 March 2015
Thanks for your reply Seetharaman Sir . Want to know if it is standard software, can we treat it as Copyrighted article and no TDS.
Again Hongkong based company does not have PE in India .
What procedure should be followed by NRI Company after such tds deduction ?
Please suggest.
Again Hongkong based company does not have PE in India .
What procedure should be followed by NRI Company after such tds deduction ?
Please suggest.
16 March 2015
Normally, in the case of any software only the license is given for the use of the software. It has been clarified by the Supreme Court of India, in the case of TCS V State of Andhra Pradesh (2004) 271 ITR 401 (SC) that granting of such licenses for th use of software is in the nature of a payment for a copyright. Just as a printed book is a copyrighted article, a standard software i.e Shrink wrapped software (though may be modified) is only a goods liable for sales tax. In such a transaction, the primary object of the transaction and intention of the parties, is to avail of an article for use. Therefore, no TDS liability arise in your case.
16 March 2015
Ok Seeharaman Sir .
If we treat it as copyrighted article then no tds. But still there is controversy like Finance Act 2012 treats right to use as royalty and copyrighted article is covered by DTAA with US.
Then in my case software is imported from Hong Kong and no DTAA with Hong Kong .
What would be effect on TDS ?
Thanks
If we treat it as copyrighted article then no tds. But still there is controversy like Finance Act 2012 treats right to use as royalty and copyrighted article is covered by DTAA with US.
Then in my case software is imported from Hong Kong and no DTAA with Hong Kong .
What would be effect on TDS ?
Thanks
16 March 2015
In that case 25% TDS is applicable any how check with other buyers.
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