Sr. Executive - Finance & Accounts
1732 Points
Joined February 2011
Dear All,
Purchase of software is a unique transaction wherein the amount is inclusive of both VAT and service tax.
The software purchased in this case I assume is a Microsoft Open License which gives a right to use the asset to the purchaser. Hence, service tax is charged. This right to use is kind of royalty paid to the buyer. Hence, TDS @ 10% u/s 195J needs to be deducted.
Even if it is not a License, it is still a service provided directly or indirectly, since service tax has been charged, else, it would not have been charged. So, TDS @ 2% u/s 194C shall be deductible in this case.
Hope this clears all doubts.
Regards