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TDS on software purchase from the vendor

Shradha Malpani (1 Points)

07 September 2023

If we purchase any software from the vendor (resident), TDS will be applicable or not ?

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5 Replies

Eswar Reddy S (CFO- at NHTF) (58263 Points)
Replied 07 September 2023

Yes. It is applicable

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Taranjeet singh (student) (22 Points)
Replied 07 September 2023

Yes, general TDS will applicabe on such purchase.

Furthermore, There is an exemption available as per below notification issued by CBDT:
Notification number 21/2012 dated 13.06.2012

No TDS u/s 194J on Payments for Software Purchase

As Per notification no. 21/2012 dated 13.06.2012 no deduction of tax shall be made on the following Payment by a person (hereafter referred to as the transferee) for the acquisition of software from another person, being a resident, (hereafter referred to as the transferor), where-

(i) The software is acquired in a subsequent transfer and the transferor has transferred the software without any modification,

(ii) Tax has been deducted-

(a) Under section 194J on payment for any previous transfer of such software; or

(b) Under section 195 on payment for any previous transfer of such software from a non-resident, and

(iii) The transferee obtains a declaration from the transferor that the tax has been deducted either under sub-clause (a) or (b) of clause (ii) along with the Permanent Account Number of the transferor.