TaxTMI 
TaxTMI 
whether TDS is attracts on development of software for i house use where the price is incusive of VAT
Appliacbility of tds on development of software
17 Apr 2009 
1 Reply 
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TDS on software purchases may not apply where the transaction is a purchase and VAT is charged by the supplier.
TDS applies to payments for work or professional/technical services, but a purchase of software treated as sale-with VAT charged by the supplier-is not subject to TDS. If the transaction in substance constitutes development or technical services rather than a transfer of software as goods or a licence, withholding obligations may nevertheless apply; therefore the legal characterisation of the supply governs TDS treatment. (AI Summary)
TDS applies to payments for work or professional/technical services, but a purchase of software treated as sale-with VAT charged by the supplier-is not subject to TDS. If the transaction in substance constitutes development or technical services rather than a transfer of software as goods or a licence, withholding obligations may nevertheless apply; therefore the legal characterisation of the supply governs TDS treatment. (AI Summary)