Software is made available to end users by software developers either directly or through distributors. In case of direct transfer, the EULA (End user Licence Agreement) prevents the end user from effecting resale of such software. Hence there is no question of multiple level deduction of tax at source. Tax has to be deducted at source either u/s 194J or u/s 195 of Income-tax Act.
However in case of transfer through distributor, the chain is Software developer-Distributor-End-user. The scope of the notification is captured in the following table
- See more at: http://taxguru.in/income-tax/taxability-software-payments-incometax-act-1961.html#sthash.HJYOqjw0.dpuf
However in case of transfer through distributor, the chain is Software developer-Distributor-End-user. The scope of the notification is captured in the following table
| S.No | Software developer | Distributor | End-user | TDS u/s | Benefit of Notification |
| 1 | Resident | Resident | Resident | 194J by Distributor to Software Developer. End user need not deduct Tax at source | Available |
| 2 | Non-Resident | Resident | Resident | 195 by distributor to Software developer. End user need not deduct tax at source | Available |
| 3 | Non-Resident | Non-Resident | Resident | 195 by distributor to Software developer and by End-user to distributor. | Not Available |
| 4 | Non-Resident | Resident | Non-Resident | 195 by Distributor to Software Developer. End-user need not deduct Tax at Source | Available |
- See more at: http://taxguru.in/income-tax/taxability-software-payments-incometax-act-1961.html#sthash.HJYOqjw0.dpuf