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No TDS u/s 194J On Payments For Software Purchase: CBDT Notification

[TO BE PUBLISHED IN THE GAZETTE OF INDIA, EXTRAORDINARY,
PART-II, SECTION 3, SUB-SECTION (ii)]
GOVERNMENT OF INDIA
MINISTRY OF FINANCE
(DEPARTMENT OF REVENUE)
(CENTRAL BOARD OF DIRECT TAXES)

NOTIFICATION NO. 21/2012 [F.No.142/10/2012-SO(TPL)] S.O. 1323(E), DATED 13-6-2012

In exercise of the powers conferred by sub-section(1F) of section 197A of the Income-tax Act, 1961 (43 of
1961), the Central Government hereby notifies that no deduction of tax shall be made on the following
specified payment under section 194J of the Act, namely:-
Payment by a person (hereafter referred to as the transferee) for acquisition of software from another person, being a resident, (hereafter referred to as the transferor), where-
(i) the software is acquired in a subsequent transfer and the transferor has transferred the software without any modification,
(ii) tax has been deducted-
(a) under section 194J on payment for any previous transfer of such software; or
(b) under section 195 on payment for any previous transfer of such software from a non-resident, and
(iii) the transferee obtains a declaration from the transferor that the tax has been deducted either under sub-clause (a) or (b) of clause (ii) along with the Permanent Account Number of the transferor.
2. This notification shall come in to force from the 1st day of July, 2012.
(J. Saravanan)
Under Secretary(TPL-III)


7 comments on “No TDS u/s 194J On Payments For Software Purchase: CBDT Notification
  1. Mirza says:

    our company is doing the business of Software (SAP B1) Purchaseing from SAP Owner and selling to the other company, tds is applicable on payment of Software purchases or not

    if yes? then how much

    under which section

    i think on maintenance for one year is 2% Tds
    renewal of Licnses is 10% tds

    i am right (please reply me as soon as possible)

  2. kalyan says:

    hi
    is TDS applicable on Software renewal
    let know TDS rate and u/s

  3. Ramarao says:

    Hi,
    We are distributor for a UK based software, we just made our first sale. After the sales we deducted our 10% commission and tried to remit the remaining 90% to our UK company, later we came to know we have to get form 15CA & CB, for which 15% TDS will be deducted.
    Now, our partner company is not accepting any deductions in India, they are saying if have to make TDS then we have to pay from our account. I am now confused how to pay a tax of 15% on a 10% margin we get from sale, more over we might have spent atleast 5% during pre sales travel and marketing related expenses.
    1. Is it mandatory to TDS on foreign remittances for software sales
    2. If so how to make my partner understand this.

  4. sandip brahmane says:

    weather tds is to be deducted on renewal of software fees. if yaes then under which section and at which rate

  5. shashi says:

    Hello Sir,

    Customer is not ready to accept that TDS is not to be deducted. (21/2012) The party I purchased from has taken the entire amount stating that TDS is not deductible.
    Kindly provide your feed back asap.

    (My Email ID spatlekar@ymail.com) Kindly provide your feed back asap.

    how to i am explain my customer everything

    MY CUSTOMER QUERY

    Second and third condition in the enclosed notification under consideration reads as –

    “….

    (ii) tax has been deducted-
    (a) under section 194J on payment for any previous transfer of such software; or
    (b) under section 195 on payment for any previous transfer of such software from a non-resident, and

    (iii) the transferee obtains a declaration from the transferor that the tax has been deducted either under sub-clause (a) or (b) of clause (ii) along with the Permanent Account Number of the transferor.”

    However, in the enclosed declaration provided by the Vendor, it is not specifically mentioned that tax has been duly deducted for any previous transfer of such asset. If the vendor can provide modified declaration with specific remarks that tax has been deducted in previous transfer of such asset, then there may not be any requirement to deduct the tax.

  6. Ankish Jain says:

    Is TDS applicable u/s 195 where a Foreign LLC (US Based) who develops and sell software & the software is purchased by an Indian LLP.

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