Are we liable to pay TDS on ERP license purchased every year.

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Jaynath Sisodiya

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Jun 30, 2010, 7:23:07 AM6/30/10

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Dear Members,

Ours is having ERP Software and every year we need to purchase yearly license. Can you please confirm whether we need to deduct TDS on said transaction ?

As per my opinion we are purchasing license and therefore TDS won't levy.

Please help

TIA

Jaynath Sisodiya

bhargavi k

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Jun 30, 2010, 7:45:51 AM6/30/10

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Mr. Jayanth

The transaction mentioned by you is in nature of obtaining licence on Annual basis. Is this software available on the shelf or is it something which is exclusively customised for your requirement?

If the software is an on the shelf product and the vendor charges only VAT, I do not see a necessity for you to deduct Tax.

However, if the product is customised by the vendor to suit your requirement and charges annual licence fee, it becomes royalty and is subject to TDS.

Regards

Bhargavi

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