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Showing posts from September, 2007

TDS Troubles (Woes) reselling Software Subscriptions

My company sells Computer Software from reputed vendors like Microsoft, Oracle, Symantec, Red Hat, IBM, Novell, Adobe, Computer Associates etc.

We are an authorised channel partner of Red Hat in India to resell their software products. Recently we sold a good number of Red Hat Enterprise Linux 1 year Subscriptions to a software company. Upon receipt of the payment, we noticed that it was short by about Rs.1,25,000/-. Inquiry revealed that TDS (Tax Deducted at Source)was deducted from the payment at the rate of 11.33%.

Upon inquiry with the cusotmer - we learnt that since it was a sale of 'Technical Service' hence as per prevailing Income tax laws TDS was deducted. But, we pointed out the customer that we were 'an authorised reseller' and not the Actual Service Provider i.e., Red Hat. Customer's argument was that while it's true (but) as per prevailing law they are obliged to deduct TDS from the supplier because there is no mechanism by which they can deduct TDS …