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TCS on Purchase of packaged Software like Microsoft

Raghu Setlur (1 Points)

25 July 2025

Should TCS be deducted while paying a vendor on packaged software purchases like Microsoft Office?

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Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (196137 Points)
Replied 25 July 2025

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).