DR all,
My client purchased software license on which service tax and vat,both has been charged. I am not sure whether TDS On same is to be deducted or not.If yes then under which section. What will be the accounting treatment ie., whether to write off the amount or to be capitalised?
Dear Ones,
There is no need to Detucted tds on Purchase on Software and treated as a expendoture, not capatilised
As per FA 2012, TDS wil be deducted in a case where, Software Licence has been acquired from outside India, otherwise there is no requirement to deduct TDS.
no TDS compliance will fall in place..
TDS u/s 194J will be deducted as it amounts to royalty. Refer Section 194J r.w clause (vi) of sub section (1) of Section 9.
Section 194J is attracted when payment is made for royalty.Finance Act 2012 has added explanation to the meaning of royalty u/s 9 of Income Tax Act whereby, royalty includes payment for any right to use a computer software.Hence,provision of tds u/s 194J gets attracted in the case mentioned
In exercise of the powers conferred by sub-section(1F) of section 197A of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby notifies that no deduction of tax shall be made on the following specified payment under section 194J of the Act, namely:-
Payment by a person (hereafter referred to as the transferee) for acquisition of software from another person, being a resident, (hereafter referred to as the transferor), where-
(i) the software is acquired in a subsequent transfer and the transferor has transferred the software without any modification,
(ii) tax has been deducted-
(a) under section 194J on payment for any previous transfer of such software; or
(b) under section 195 on payment for any previous transfer of such software from a non-resident, and
(iii) the transferee obtains a declaration from the transferor that the tax has been deducted either under sub-clause (a) or (b) of clause (ii) along with the Permanent Account Number of the transferor.
IN SHORT NO TDS REQUIRED TO BE DEDUCTED
AS PER NOTIFICATION NO. 21/2012 [F.No.142/10/2012-SO(TPL)] S.O. 1323(E), DATED 13-6-2012
ITEM CAPITALISED IS NOT SUBJECT OF TDS YOU HAVE TO DEDUCT TDS IF IT IS COME UNDER THE TAXABLE SERVICES.
BUT IN CASE OF PAPER LICENSE TDS IS NOT APPLICABLE
CAclubindia
