15 February 2016
My client, resident Indian, wants to pay to a non resident situated at Spain for Purchase Commercial single License for usage of Software of USD 4000.The Software is used for Designing of Jewellery. ALso the Non resident has no Permanent establishment, PAN NO and no TRC. 1. Now Whether TDS is applicable on above payment or not? 2. If applicable then at what rate? 3. If not applicable then in Form 15CA and 15CB what reason has to be given for Non Deduction of TDS?
15 February 2016
On purchase of software from a non-resident TDS (Royalty)shall be deducted under section 195 at the rates in force. (i.e. @ 25% as provided in section 115A or if relevant DTAA provides lower rate than that rate shall apply instead of 25%) -
15 February 2016
As per Judgment of Delhi High Court in the case of M/s Infrasoft Ltd (0214) 220 Taxmann 273, purchase Software License is not "Royalty" And therefore and as per Supreme Court Judgment in case of Tata Consultancy Services, the Software is to treated as "goods" as used in Article 366 (12) of the Constituion of India is very wide and includes all types of movable properties whether tangible or tangible. Accordingly payment on Purchase of Commercial Single License for using Software is not Royalty and therefore TDS is not applicable. After looking into above case laws please comment
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