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Bengaluru is considered as the Silicon Valley of India which consumes bulk of the software purchases. The Karnataka high court has taken a uniform stand that software is revenue expenditure. In [2022] 448 ITR 94 (Kar) the Court held that software is an aid in manufacturing process rather than a tool itself. It merely enhances the productivity or the efficiency and therefore, it has to be treated as a revenue expenditure.

It may be wise for the CBDT to amend the income tax rules to remove indigenous developed softwares from the list of depreciable assets to reduce unwanted litigation.

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