TDS on payment towards purchase of computer software

This query is : Resolved

Guest

Guest (Querist)

15 December 2008 As you may be aware that under Section 194 J of the Income tax Act which was amended to include Royalty with effect from 13.07.2006 by the Taxation Laws (Amendment) Act 2006, we have been advised that Computer Software is covered by the definition of Royalty as per the Income tax Act. As such, we have been advised to deduct TDS on purchases of software made from 01.04.2008.

TDS @ 11.33% will be deducted as per law for the purchases of software made from you from 01.04.2008 to 31.10.2008. We shall deduct the TDS as applicable for which your account will be debited and tds certificate will be provided to you for the same.

Pls validate immdtly

CA Tilak Raj Sharma

CA Tilak Raj Sharma (Expert)
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15 December 2008 There will be two situations: First the software that is made by you (means programmed as per your requirements and as per your directions) and second is standard softwares

TDS is applicable only in the first case and not in the second case.