My friend owns a proprietorship concern which is providing Software as a service on subscripttion basis. Now he has signed a client who wants the service for a period of 3 years and is ready to pay a fixed monthly subscripttion fee. Should the TDS on the subscripttion is applicable under 194j or 194c? Please do clarify on priority.
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Tds on fixed term subscription of saas
Replies (11)
I think 194c
as professional service means some kind of skill based service but as u said it is simple contractual arrangement
In my view- It will be covered u/s 194J.......providing Software as a service shall be treated as fees for technical services.
Thanks Amrit for the prompt response,
Can you please let me know why you think so?
I wondering if it will fall under the purview of 194J since it is a technical service. Can a technical service ( since it is a cloud software and the user is not installing it in his pc) fall under 194C? if so, under what circumstances?
TIA
sir
simply are you providing software development service or providing already developed software for some contractual period if yes then how can u consider providing software on subscripttion as technical service
simply are you providing software development service or providing already developed software for some contractual period if yes then how can u consider providing software on subscripttion as technical service
| Originally posted by : CA.ATUL MISHRA | ||
 |
In my view- It will be covered u/s 194J.......providing Software as a service shall be treated as fees for technical services. |
 |
Thank you Atul for your thoughts. I had talked a few chartered accountants and got mixed responses. That is what brought me here. I was also of the opinion that it will be covered under 194J, Having said that, the software actually provides business intelligence and so might fall under business support services and since the contract is for a fixed period, Can't it fall under 194C?
Would love to hear you thoughts on this.
TIA
That is my concern too Amrit,
Even though they do slight customization for each client, they are charging only for using the service. It is not a software developement expense but subscripttion for using the service. That should put it under 194C but then again since it is a technical product, I am a bit skeptical.
dear sir
but not for you as you are providing software on contractual basis against some fixed amount of subscripttion and one thing more even you are customizing slightly but you are charging mainly for providing software on contractual basis
yes if u can charge for both thing separately then u can use 194j for customizing portion and for balance 194c as you are saying
but not for you as you are providing software on contractual basis against some fixed amount of subscripttion and one thing more even you are customizing slightly but you are charging mainly for providing software on contractual basis
yes if u can charge for both thing separately then u can use 194j for customizing portion and for balance 194c as you are saying
| Originally posted by : Amrit kumar karn | ||
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dear sirbut not for you as you are providing software on contractual basis against some fixed amount of subscriptttion and one thing more even you are customizing slightly but you are charging mainly for providing software on contractual basis yes if u can charge for both thing separately then u can use 194j for customizing portion and for balance 194c as you are saying | |
Thanks Amrit,
That pretty much clears my doubt. Thank you so much for the support.
it my pleasure sir
If u r providing license to user for using services then it will cover u/s 194J.
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