Cross border payments for use of software not taxable as royalty

Last updated: 03 March 2021
Quick Summary
The Supreme Court has ruled that payments made for the use of software from overseas are not to be considered royalties and therefore are not taxable in India. This decision clarifies that such transactions do not fall under the definition of royalty income that accrues in India under the Income Tax Act. Consequently, Indian entities are not required to deduct tax at source for these payments.

Court :
Supreme Court of India

Brief :
The Supreme Court on 2nd March 2021 held that Indian Companies need not deduct tax for the amount they pay foreign manufacturers and suppliers for use or re-sale of computer software through end-user license agreements (EULA).

Citation :

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Published in Income Tax
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