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

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..... ited 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 determin .....

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..... ore 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 .....

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..... he 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 ca .....

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