Payments made to buy software from foreign cos not liable to be taxed in India: SC

Payments made to buy software from foreign cos not liable to be taxed in India: SC

SC decides a 20-year old dispute on the issue of taxation of software purchased from abroad.

The Supreme Court has ruled that payments made to buy software from foreign companies aren’t liable to be taxed in India. Dismissing Income Tax (IT) Department’s arguments which favoured taxation on imported software, the top court set aside orders from various High Courts which had termed amounts paid to buy software from abroad as “royalty” and had allowed taxation.

Settling the 20-year old dispute on the applicability of equalisation levy on cross-border transactions involving downloading of packaged software, the apex court held that the amount paid by resident Indian end-users or distributors to non-resident computer software manufacturers doesn’t account for royalty to use the copyright in the software, therefore can’t attract any tax liability as per law. 

News Source: Times Now News

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