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Tds on payment of software charges to foreign company

D K KHARBANDA (KRIBHCO) (50 Points)

02 February 2016

While making payment to a foreign company by Indian company on quarterly basis for using their software in India for radiology purpose, is section 195 is applicable for deduction of TDS in India or not. If yes, at what rate TDS shall be deducted from their payment.

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JOEY TRIBIONI (Article) (200 Points)
Replied 02 February 2016

Under section.195 all the payers are covered irrespective of their status like Individual, HUF, and Firm & Corporate etc. So all the payers are responsible to deduct TDS under this section if they are making payment to non resident as per prescribed conditions

Under this section all the payees are covered whether Individual or Corporate or any other status ( only if your foregn company is a non resident under section 6 of Income Tax Act)

TDS has to be deducted at the time of credit or payment whichever is earlier

Relevant rate in force as per chapter XVIIB. Incase payee not having valid PAN, then TDS rate as per rate prescribed chapter XVIIB or 20% whichever is higher will apply.

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