The Cross-Border Software Purchase Conundrum: Supreme Court's Clarification on TDS for Non-Resident Software Transactions as Royalty

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ted v. The Commissioner of Income Tax & Anr. revolves around the taxation of payments made for the purchase of computer software from non-resident suppliers. This landmark judgment delivered by the Supreme Court, addresses several appeals that raised questions regarding the classification of such payments--whether they should be treated as 'royalty' or as business income, thereby determini....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....re issue was the classification of payments made for software purchases from non-resident suppliers--whether these constitute 'royalty' under sections 9(1)(vi) and 195 of the Income Tax Act and, consequently, whether such payments are subject to TDS. * Applicability of DTAAs: Another significant issue was the applicability of Double Taxation Avoidance Agreements between India and the c....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....e obligation to deduct tax at source under section 195 of the Income Tax Act, noting that such deduction is mandated only if the payment to the non-resident is chargeable under the Act, taking into account the beneficial provisions of applicable DTAAs. * Software Purchases as 'Goods': The judgment also touched upon the classification of software purchases, observing that in certain cas....