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applicability of tds on software purchase

bhavini bansal (7 Points)

18 June 2019

is any TDS need to be deducted on purchase of software ?if yes then the applicable section for this?

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Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (185054 Points)
Replied 19 June 2019

For ready to use software purchased on-self; no TDS applicable.

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Dineshchandan (articled assistant) (84 Points)
Replied 19 June 2019

In most of the cases, Purchase of Software actually refers to purchasing a licence to use the software. By purchasing the license, the user gets only a right to use (called as a licensed user) and he wont be the owner of the software purchased by him. In view of this explanation, Purchase of Software (i.e. purchase of license) amounts to payment of royalty for use of software. Payment of Royalty warrants TDS under section 194J. However, per CBDT notification number 21/2012 dated 13.06.2012, TDS is not required to be deducted if certain conditions are met. One such condition is seller, who is a distributor, declares that TDS on such software was already deducted in the supply chain. Many sellers provide such declaration on their invoice. So, you should check if such declaration is given on the invoice, else TDS might be applicable.