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Tds on software

Rajiv Sinha

Dear Sir Pls clear deduction of Tds on software purchase 0r development as per custmer specification. Regards, Rajiv sinha

Debate Over TDS Deduction on Software: Court Ruling Suggests License-Based Tax, Differing Views on Development. A query was raised regarding the deduction of TDS on software purchases or development per customer specifications. One respondent referenced a Karnataka High Court judgment suggesting that TDS applies to software purchases due to the inclusion of a license. Another respondent noted that the tax department might disallow expenditures in both cases but opined that TDS should not apply to software purchases, while it should apply to software development tailored to customer specifications. (AI Summary)
Income Tax
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Rama Krishana on Dec 3, 2009
Since there is specific judgment of Karantka high court addressing the similar issue, you are advised to study that decision - (2009 - TMI - 35016 - High Court of Karnataka) - As per the decision, it appears that this activity would be liable for TDS since purchase of software would include licence.
Anuj Gupta on May 1, 2010
Dept. will try to disallow the expenditure in both the situations . So practically if you have strength to fight the cases then my opinions are as follows: TDS should not be applicable in case of software purchase whereas it shall be taxable if the development is as per the customer specification.
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