TDS on foreign payment for Soft ware and annual AMC

[Pradeep Jain]

we  have imported INCA Engine Calibration System (Hardware parts) for R&D from ETAS GmbH – Germany, now want to import Operating Software with Licence in CD from ETAS GmbH – Germany Further, as informed by Indrnil Sarkar (R&D) this Licence will be for life time, but we will have to pay annual AMC to the ETAS GmbH – Germany in order to get uninterrupted service support and up-gradation time to time .

We seek your opinion is TDS would be deducted on amount to be paid for purchase of :-

1- Soft ware in CD form

2- payment of Annual AMC

Best Regards

Pradeep Jain

 

AI Summary

TDS on foreign payments for software and AMC treated as royalty; higher withholding applies if no tax identifier provided.
Both the software licence purchase (on physical media) and recurring annual maintenance charges paid to a foreign supplier are treated as royalty and subject to withholding under the domestic foreign-payment withholding provision. Applicable withholding rates derive from domestic withholding rules, finance act schedules or an applicable double taxation agreement; failure of the foreign payee to provide a tax identifier mandates a higher statutory withholding rate, with refund remedies available on return filing.