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Tds on software

rishabh khaitan (articleship) (78 Points)

23 March 2018

What is the TDS implication on purchase of software in GST regime?

I have purchased software(without any modification) from a vendor who deals in readymade software,whether I am required to deduct TDS on the same.

According to the Vendor no TDS is required to be deducted as it comes under Goods in GST,Is he right?

Please Explain.

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14 Replies

RAJA P M ("Do the Right Thing...!!!") (128091 Points)
Replied 23 March 2018

Yes... He is exactly right...
It's supply of goods... Not a service...

In case he ll charge any Installation and Services then You ll consider these are under Service except Software Purchase

1 Like

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sandesh (Accountant) (56 Points)
Replied 23 March 2018

Yes ! Becoz on software we can't deduct tds.

1 Like

Pankaj Rawat (GST Practitioner) (55052 Points)
Replied 23 March 2018

No there is no TDs on software purchase

2 Like

CA SANDESH MAHIPAL (Practicing in GST and MSME ) (1985 Points)
Replied 23 March 2018

as per my view, tds @ 10% is to be deducted u/s 194J. but if supplier claims benefit under notification 21/2012 of income tax , then only tds need not to be deducted.

kindly rectify me if wrong with exact section or rule.

RAJA P M ("Do the Right Thing...!!!") (128091 Points)
Replied 23 March 2018

194J. Fees for professional or technical services.—(1) Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any sum by way of—

(a) fees for professional services, or

(b) fees for technical services,

@ MR. CA SUNNY AGGARWAL.,
I don't want details for the section...
I just want the explanation of the word of "FEES".

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Uday (Article Assistant) (411 Points)
Replied 24 March 2018

1)As per GST no TDS provisions Applicable now
2) As per Income Tax TDS on software purchase is liable to deduct u/s 194J, TDS is not liable when
a) Software purchased is without modifications
b) Vendor already deducted TDS when he purchased
c) buyer obtains declaration from vendor
I think CA Sunny sir has mentioned the notification which deals about above conditions

As per schedule II in GST any activity related to software is service

1 Like

CA SANDESH MAHIPAL (Practicing in GST and MSME ) (1985 Points)
Replied 24 March 2018

Agree with Uday ji.

rishabh khaitan (articleship) (78 Points)
Replied 24 March 2018

Thanks for the valuable suggestions.

In short what i understand is that if the vendor provides me with the declaration that TDS has been deducted earlier,then I am not required to deduct TDS on the purchase of the software.

And if vendoe does not provide me with declaration then I am required to deduct TDS on the purcahse of the above software.

Kindly correct me IF I am wrong

RAJA P M ("Do the Right Thing...!!!") (128091 Points)
Replied 24 March 2018

Dear Rishabh Khaitan., Wait on Our Experts will reply to You...

RAJA P M ("Do the Right Thing...!!!") (128091 Points)
Replied 24 March 2018

Also will PURCHASE (one client) a TALLY SOFTWARE GOLD USER and Rs. 63720 + GST... After experts reply I'll give options to the client...

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Pankaj Rawat (GST Practitioner) (55052 Points)
Replied 24 March 2018

Development of software is fall under the service

software in physical form (ready made) falls under teriff act under HSN code 85238020 , so it's goods

@ Raja sir is correct it's fall under goods
& no TDs is to be deducted