TDS on customised software from outside India

[Shrikanth Parmarthy]

Dear experts,

Please provide your views on the the following:

1. Is TDS applicable on purchase of customised software by a company from UK. The software is used for calculating discounts and rebates to be given to the customer. The software is tailored made as per the company requirements. The invoice is raised by the supplier in Euros

2. After the purchase year on year the company is paying annual subscription fee for providing access to the software to a certain number of users. Is TDS deductible on the subscription fee to be paid to the vendor in Euro.

AI Summary

Software Purchase and Tax Implications: Cross-Border Transaction Raises Complex TDS Questions Under Section 194J of Income Tax Act A company in India purchased customized software from a UK vendor for calculating customer discounts. The transaction involves a one-time software purchase and subsequent annual subscription fees. The legal analysis focuses on tax deduction at source (TDS) requirements under Indian income tax laws and the India-UK Double Taxation Avoidance Agreement, considering the nature of software rights and potential tax implications for non-resident payments.