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TDS ON SOFTWARE LICENCE

balgopal (accountant) (40 Points)

20 March 2010

WE HAVE PURCHASE A SOFTWARE LICENCE AMOUNTING RS.10 LACS PARTY CHARGES VAT & SERVICE TAX BOTH.

SUGGEST WE HAVE TO DEDUCT TDS ON BILL OR NOT?

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14 Replies

balgopal (accountant) (40 Points)
Replied 20 March 2010

Originally posted by : balgopal
	WE HAVE PURCHASE A SOFTWARE LICENCE AMOUNTING RS.10 LACS PARTY CHARGES VAT & SERVICE TAX BOTH. SUGGEST WE HAVE TO DEDUCT TDS ON BILL OR NOT?

Nalini Tiwari (Articleship) (34 Points)
Replied 22 March 2010

hi..

As per me if it is costomised software ( as per your specific instruction) than TDS will be deducted but if it is general software than TDS will not be deducted.also in case of P(Princile) to P (Principle) purcahses and sale no TDS is will be deducted.

jitu (Chartered Accoutnant) (32 Points)
Replied 23 March 2010

According to me

If it is a software specifically designed by the vendor as per your requirement.. then TDs will attract..

if it isnot based on your requirement and any one can use the same like tally and winman softwares.. it willl not attract

balgopal (accountant) (40 Points)
Replied 23 March 2010

Dear Friend

This is not a software, This is a user licence for ERP package.

Thanks for your reply

Nalini Tiwari (Articleship) (34 Points)
Replied 23 March 2010

TDS will not be deducted.

jitu (Chartered Accoutnant) (32 Points)
Replied 23 March 2010

Even ERP is software only frnd..

But in this case , the same is predesiged ERP package like Tally .. and can be used by anyone...

So According to me TDS WILL NOT ATTRACT

I agree with ms.Nalini

shushantsinghal (BCOM(HONS),C.A) (283 Points)
Replied 23 March 2010

HIII

TDS SHALL BE DEDUCTED ON THE SAID PURCHASE SINCE SERVICE TAX COMPONENT IS ADDED ON THE SAME.....

SINCE ONE OF OURS CLIENT HAS THE SAME BUSINESS & THEIR PURCHASER DEDUCT THE TDS ON SUCH BILL...

IN MY OPINION IT IS BETTER 4 U TO DEDUCT TDS OTHERWISE WHILE IN CASE UR HAS BEEN SELECTED HAS FOR SRUTINY AT THAT TIME IT WILL CREATE PROBLEM.....

THANX

Gaurang Desai (CA FINAL & CS Inter Student) (123 Points)
Replied 26 March 2010

if the software is designed for your special pupose thanu require to deduct TDS & if it is general software than not, however susbcription on renewal charges for liable to deduct TDS

karthikeyan.v (Chartered Accountant) (523 Points)
Replied 26 March 2010

DEar Balagopal

TDS has to be deducted under sec 194 C @ 2 %

karthi

Sreejith.R (CA student) (37 Points)
Replied 05 August 2010

TDS has to be deducted since the bill contain Service Tax.

Manoj BG (Tax Professional and in Service) (1795 Points)
Replied 05 August 2010

DEAR BAJGOPAL,

FIRST OF ALL, IF BILL INCLUDES THE SERVICE TAX, THEN IT DOESN'T AUTOMATICALY MAKE IT AS CHARGEABLE TO TDS. WE HAVE TO SEE THE PROVISIONS OF SEC 192 TO 194 TO DETERMINE UNDER WHICH SECTION PARTICULAR PAYMENT COVERED.

LICENSE TO USE THE SOFTWARE IS NOTHING BUT THE ROYALTY TO BE PAID TO SOFTWARE MANUFACTURER FOR USING HIS SOFTWARE. THE WORLD ROYALTY HAS DEFINED UNDER EXPLANATION 2 TO SECTION 9(1)(vi), DEFINED AS UNDER :

ROYALTY MEANS CONSIDERATION FOR

(a) THE TRANSFER OF ALL OR ANY RIGHTS (INCLUDING GRANTING OF LICENSE) IN RESPECT OF PATENTS, INVENTION, MODEL, DESIGN, SECRET FORMULA OR PROCESS OR TRADE MARK OR SIMILAR PROPERTY

(b) ........

(d) ......

(e) THE USE OR RIGHT TO USE, ANY INDUSTRIAL, COMMERCIAL OR SCIENTIFIC EQUIPMENT

(f) THE TRANSFER OF ALL OR ANY RIGHTS (INCL GRANTING OF A LICENCE0 IN RESPECT OF ANY COPYRIGHT, LITERARY, ARTISTIC OR SCIENTIFIC WORK

(g) RENDERING ANY SERVICE IN CONNECTION WITH AFORESAID ACTIVITIES.

THUS, FROM THE ABOVE IT IS MUCH MORE CLEAR THAT LICENSE FEES PAID IS WELL WITHIN DEFINATION OF ROYALTY. AND THUS ROYALTY IS CHARGEABLE @ 10% (SUR+EC+HSEC) UNDER SEC 194J.

HOPE ALL THIS SOLVES U’R QUERY.

REGARDS,

MANOJ

Kumar Patil (Accounts manager) (27 Points)
Replied 19 February 2015

Hello,

I've purchased software license from my parent company and sold locally. My local customer has been deducted TDS and paid the money. Now I've to make the payment to my parent company. once again should i deduct the TDS U/S 195? if Yes, what rate.(already my local customer deducted 10% TDS on the same license.).