TCS on Purchase of packaged Software like Microsoft

 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.