Tds on software development

is separable (capable of being separated and sold, transferred, licensed, rented, or exchanged, either individually or together with a related contract) 

THIS DEOSNT MEAN ITS REVENUE EXPENDITURE.

Your both wrong because this can serve as a prototype as well. It can be used inhouse or sold as well. But its still an intangible asset.

if the asset is 80, and 194j is 20 and tds is 10 per say

Dr. Intangible asset 80

Dr. 194J asset 20

Cr. Payables 90

Cr. TDS 10

You developed it just now and not in production yet. So this can be called as deferred expense but not deferred revenue expense because its long lived asset and revenue expenses are short lived and expensed. Besides Software is an intangible asset when developed but not put into inventory yet

Yuri! I'm hacked. My mobile calls and emails are hacked. Cops and hackers hack them. I got this doubt because when ever I send an CV email, I see images of obese men or cops. And I never got a job. That means, they hack me and contact my employers asking them to not to give me a job. Otherwise why will I see images through internet telepathy? 

Originally posted by : Yasaswi Gomes new
	Yuri! I'm hacked. My mobile calls and emails are hacked. Cops and hackers hack them. I got this doubt because when ever I send an CV email, I see images of obese men or cops. And I never got a job. That means, they hack me and contact my employers asking them to not to give me a job. Otherwise why will I see images through internet telepathy?

Yuri!!! Who are you???? Are you from CHINA. My AI coding has messed up ever since Ive contacted you. Im seeing chineese websites when I bing. SO you have compramised. Never post ads about ethical hackers here or else go to jail. 

Tax Deducted at Source (TDS) is a tax collection mechanism used by the Indian government where tax is deducted at the source of income, typically by the payer, and remitted directly to the government. For software development services, TDS regulations can apply depending on the nature of the transaction and the relationship between the service provider and the recipient of the services.

Here’s a breakdown of the key TDS considerations for software development in India:

1. TDS on Professional Services (Section 194J)

• If a software developer is providing professional services (as defined by the Income Tax Act), the payer must deduct TDS under Section 194J.
• Rate: 10% (if PAN is provided by the developer), or 20% (if PAN is not provided).
• Applicable for payments to resident individuals, firms, or companies providing professional services such as software development or IT consulting.
• Calculate Tax Diducation Calculator

For a software development service worth Rs. 5,00,000, the TDS charges will be 2% if this is just a technical service. But if it is a professional service, then the rate of TDS will be 10%. 

Generally, TDS is paid by the payer for receiving a professional service or a technical service from a service lender. For software development field, may be developing a website or designing a website or any other related service. If this is an in-house service, then it comes under salary and does not include TDS.

Since the payable amount exceeds Rs. 30,000 which is the limit for a financial year without TDS, the payable amount would be either Rs. 10,000 (if considered a technical service at the rate of 2%) or Rs. 50,000 (if considered as a professional service at the rate of 10%).

The payment has to be done by the payee and the tax has to be directly remitted to the government tax.

Check the Moneybip to learn more about TDS.

Software development cost of Rs. 5,00,000 generally falls under the category of "fees for technical services" as per Income Tax Act, hence TDS u/s 194J is applicable. It is not treated as royalty unless rights to use copyrighted software are transferred. 

Regarding accounting, if the expenditure results in creation of an intangible asset with enduring benefit, it can be capitalized; otherwise, it is charged as revenue. Deferred revenue expenditure treatment is not common under current standards. Companies like CONTUS Tech typically classify such costs carefully to ensure tax compliance and proper asset recognition.

@ All Members

I started reading this thread hoping to improve my swimming the Indian Taxation Ocean [Maze].

Now got severe headache [migrane] :))

 TDS on payments for software development depends on how the engagement is structured:

If the software developer is an individual and the engagement is for professional services (software design, development, consulting), TDS under Section 194J applies at 10% on amounts exceeding Rs 30,000 per year.

If the services are purely technical in nature (e.g. standard software product sale or maintenance contract), the rate under Section 194J for technical services is 2%.

If the developer is employed with you as a regular employee, tax is deducted under Section 192 at the applicable slab rate.

Key test: if the developer provides services on a project basis and is free to take other clients, 194J applies. If there is an employment relationship, 192 applies.

For companies managing a mix of employees and contractors, getting the TDS classification right upfront avoids demand notices: [Payroll Management Services](https://taxgarden.in/services/payroll-management)