Govt to remove multi-level TDS on software from July

Given the low margins at which software distributors operate, this is a welcome change that will also boost the consumer software product ecosystem in India.

Indian government has decided to remove multi-level TDS system from July 1, giving a major boost to the software industry. In its current form, TDS (Tax Deduction at Source) of 10% is levied at every level of software distribution chain – starting from master distributor to retailer and then to the final consumer.

Given the low margins at which software distributors operate, this is a welcome change that will also boost the consumer software product ecosystem in India.

β€œFinance Minister Pranab Mukherjee had last week said that Section 194 (J) of the Income Tax Act, 1961, would be amended so as to avoid multi-level TDS on information technology sector.. The abolition multi-level TDS for software companies will be effective from July 1. The law ministry is vetting the final blueprints of the amendments in the I-T Act,” [source].

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