Applicability of TDS

[PRADEEP KUMAR]

We have received one Invoice wherein description on bill mentioned as:- ERP Software Solution (Total Cost with Implementing & Training Warantee for one year) amounting to Rs. 8.25 Lakhs. Vendor has charged VAT & 5% on Invoice amount. Pls. let us know whether we should deduct TDS or not on this invoice.

[Ravi Chopra]

It it is a sale of goods, there can not be question of TDS. Yes, if it is a professior or technical services, you need to deduct TDS. Please see the terms and contents of the agreement if any or particulars of transactions.

AI Summary

TDS on software services depends on whether the ERP supply is a sale of goods or a professional/technical service. TDS applicability hinges on transaction characterisation: no TDS for a sale of goods, but TDS applies where consideration is for professional or technical services (including implementation, training, warranty services). Classification must be based on agreement terms and invoice particulars, taking into account the noted indirect tax treatment such as VAT.