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TDS deduction on purchase of Software licence

YASHVINDER SINGH KAUSHAL (Executive) (29 Points)

17 November 2022

Dear Experts,

Is TDS applicable on purchase of Software licence from an Indian co?

If yes, then what rate of TDS is applacable?

Thanks in advance.

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8 Replies

Manoj BG (Tax Professional and in Service) (1795 Points)
Replied 17 November 2022

U/s 194J @ 10% as this would amount to fees for technical services.

Regards,

Manoj

1 Like

Eswar Reddy S (CFO- at NHTF) (58213 Points)
Replied 18 November 2022

Yes. Tds is applicable at 10% under section 194J

6 Like

CA Raj Doshi (Practising CA) (8723 Points)
Replied 19 November 2022

In due reference of the notification No. 21/2012 dated 13-6-
2012 issued by Ministry of Finance (Department of Revenue) (Central Board of Direct Taxes) Govt. Of India
which will be effective from 1st July 2012 that no TDS will be deducted on the sales of all (Both Downloaded or
Physical ) Software by the reseller or end user if the transferor gives the declaration that the TDS has been
deducted under section 195 or 194J of the income tax act on the invoice and the same is acquired by the transferee
in subsequent transfer and transferor has transferred the software without any modification. This is being
elaborated under different categories as mentioned below.
1. Packaged Software’s / Box Software’s
On the sale of these software’s only VAT is being charged on the invoice but due to the recent budget
notification these software’s were again fall into the category of Royalty and subject to TDS under section
194(J) of Income Tax Act but with this notification, this condition will be waived off and hence no TDS will
be deducted on the bill Value
2. Downloaded Software’s
Here both service tax and VAT is being charged while sale of these software but now with the above
provision this will also come into the same category as mentioned above in point no. 1 and no TDS will be
deducted.

1 Like