AI software services are technical or professional according to 194J?

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Namaste all 🙏 Wishing your families and you a very happy and prosperous Dusshera.

I wish to start a AI software services company that deals with Indian customers (primarily businesses) as well as with foregin individuals and companies (export?). What would be ideal company form to take for this? I am solo currently and may need to hire contractors at some point.

And how will 194J apply? I believe I read somewhere that if the agreement and invoices are as "consultant" then I fall under professional services but if I use "Software Architect" or "AI Architect" or something of that nature, it will be deemed technical services? Then how would something like "Fractional CTO consulting" be categorized? It's very confusing.. and reading the tax act doesn't help with the understanding.

When I deal with customers, what do I have to tell them so that they understand and withold the right amounts? For customers both outside of India and customers inside India? Or is it just something I have to manage myself?

Also, is it advisable to do it with an entity or without an entity? Which will give me maximum leverage in terms of reducing my tax liability?

Replies (1)

One Peron Company could work. OPC  is simpler if you are solo. Fractional CTO consulting might be considered professional servies. 

For Indian customers , TDS (Tax Deducted at Source) under 194J might apply. For foreign customers , you might need to manage tax withholding based on Double Taxation Avoidance Agreements (DTAAs) between Indian and their country. 


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