We are Paying CRM Software Annual Subscription & Member Mobile Apps Subscription so, please request you to give me a suggestion TDS applicable or not , if applicable what is %.
11 July 2024
When you pay for CRM software annual subscription and member mobile apps subscription to a non-resident vendor, TDS (Tax Deducted at Source) may be applicable under Indian tax laws. Here's a detailed overview:
### Applicability of TDS:
1. **Section 195 of Income Tax Act:** - Section 195 applies when a payment is made to a non-resident entity for any sum that is chargeable under the provisions of the Income Tax Act. - Payments for software subscriptions and services provided by non-residents are covered under this section.
2. **Rate of TDS:** - The applicable TDS rate under Section 195 is generally 10% of the gross amount of the payment. - This rate may be subject to reduction under the Double Taxation Avoidance Agreement (DTAA) between India and the country where the non-resident vendor is based. - It's advisable to check the specific DTAA rates applicable to ensure correct deduction.
### Steps to Determine TDS:
- **Nature of Payment:** Confirm that the payments made for CRM software and mobile app subscriptions qualify under Section 195 as payments to non-residents. - **TDS Deduction:** If the vendor is a non-resident, deduct TDS at the applicable rate (usually 10%) on the gross amount paid. - **DTAA Benefit:** If applicable, obtain a Tax Residency Certificate (TRC) from the vendor to avail lower TDS rates as per the DTAA.
### Practical Considerations:
- **PAN Requirement:** Non-resident vendors do not have PANs in India. Therefore, you do not need to worry about PAN compliance in this case. - **Payment Documentation:** Ensure proper documentation of payments made, including invoices and proof of TDS deduction.
### Conclusion:
- **TDS Applicability:** TDS is applicable under Section 195 on payments made to non-resident vendors for CRM software annual subscriptions and member mobile apps subscriptions. - **Rate of TDS:** Generally 10%, subject to DTAA benefits if applicable. - **Consultation:** For precise compliance and understanding of DTAA provisions, it's recommended to consult with a tax advisor or chartered accountant who can provide tailored advice based on your specific circumstances and the latest tax regulations.
By following these guidelines, you can ensure compliance with TDS requirements while making payments for CRM software and mobile app subscriptions to non-resident vendors.
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