Should TCS be deducted while paying a vendor on packaged software purchases like Microsoft Office?
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TCS on Purchase of packaged Software like Microsoft
Replies (4)
Quick Summary
In practice, the seller (vendor) is responsible for collecting TCS. As a buyer, you are not required to deduct TCS yourself. If liable you are supposed to deduct TDS.
Supreme Court jurisprudence has clarified that purchase of standard/software packages does not constitute royalty and thus payments for such purchases from non-resident suppliers are not liable for TDS under section 195.
For domestic transactions, the view is that TDS is not required under section 194J for off-the-shelf software if notification conditions are satisfied (Notification No. 21/2012).
Tcs collection is not on buyers part.
Sir,
Should we deduct it under 194Q? Please clarify?
Warm Regards,
Raghu
Yes,
-
Canned/off-the-shelf software (purchase of goods): TDS u/s 194Q applies.
-
License/subscripttion/customized software (royalty/services): TDS u/s 194J or 195 applies.
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