TDS u/s 194J

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Narayanan (Querist)
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18 March 2009 We are an IT company involved in distributing Branded International software to end users in India. We purchase the software from the Indian subsidiary of the Software MNC and then resell it to the end users in India. The invoice from the Indian subsidiary and our invoice on end user mentions "License fee". Is TDS deductible on Software Licence fee under Section 194 J. If "yes" why if "no" why. Please support the answer legally

The matter has become complicated because effective from 16th May 2008 service tax is also applicable on Software License fee over and above VAT which was being charged post the TCS case wherein Software were to be treated as "goods".

Rajesh Kumar

Rajesh Kumar (Expert)
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19 March 2009 Although the invoice says "license fee", basically it is a transaction in goods- no TDS is deductible.

Narayanan

Narayanan (Querist)
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19 March 2009 Effective 16th May 2008 service tax is also applicable on Software License fee over and above VAT This has complicated the matter. Since we are charging both to customers since the Indian subsidiary of the MNC software is charging us also. Now if we mentioned TDS is not deductible on Software License fee since it is a good the customer would raise a question as to why we are levying service tax then

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