TaxTMI 
TaxTMI 
Dear Sir Pls clear deduction of Tds on software purchase 0r development as per custmer specification. Regards, Rajiv sinha
Tds on software
23 Nov 2009 
2 Replies 
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TDS on software transactions: purchase with licence treated as subject to withholding; bespoke development treated as taxable service.
TDS applicability on software depends on transaction character: purchase that includes a software licence is treated as subject to withholding per a Karnataka High Court decision, whereas development supplied to customer specification is treated as taxable service with withholding implications; authorities may attempt to disallow expenditure in either case, so classification determines withholding obligations and litigation risk. (AI Summary)
TDS applicability on software depends on transaction character: purchase that includes a software licence is treated as subject to withholding per a Karnataka High Court decision, whereas development supplied to customer specification is treated as taxable service with withholding implications; authorities may attempt to disallow expenditure in either case, so classification determines withholding obligations and litigation risk. (AI Summary)