Your company's AWS, GitHub or Slack bill has no TDS on it. Is that actually safe?

Cloud and SaaS billing grew up under a cloud of uncertainty, literally, over whether paying for it counts as buying a service or licensing something closer to "technology." The Supreme Court's 2021 Engineering Analysis ruling settled the general software-payment question first: paying for the use of software, not the underlying copyright, isn't royalty. The Revenue's next move was to argue cloud infrastructure specifically is different, equipment or process royalty rather than plain software, and litigate that argument fresh against named cloud vendors.

It's lost twice in a row, at both tribunal and High Court level, on the two biggest names in the space. The Delhi ITAT and then the Delhi High Court (May 2025) rejected it for Amazon Web Services' own cloud fees. The same benches rejected it earlier (February 2024) for GoTo Technologies' SaaS subscriptions. No published ruling has gone the other way. That's a real, consistent trend, not "the law is unclear either way."

Two things keep this short of a done deal. First, and this isn't hypothetical, the Revenue has already taken the exact AWS ruling this page relies on to the Supreme Court: it filed a Special Leave Petition against the Delhi High Court's decision, and the Supreme Court was still hearing submissions on it as recently as April 2026, with no final order yet as of this page's last review. Until that's decided, the High Court ruling is the best available answer, a strong one, but not the last word. Second, this specific run of cases covers AWS and GoTo by name; a different vendor's contract terms or service model could, in theory, be argued to sit differently, even though the underlying reasoning (standardised, automated access, no technology "made available," no equipment transferred) reads as squarely applicable to most mainstream cloud and SaaS billing. Favourable, consistent case law is a strong position to defend from, not a guarantee nobody asks the question on your specific facts, and even less a guarantee while the Supreme Court itself still has the point in front of it.

If Section 195 does apply and nothing was withheld, Section 40(a)(i) disallows the FULL expense from your company's taxable income, not just the tax that should have been withheld. On a meaningful annual cloud or SaaS spend, that's a real hit to taxable profit, not a rounding error.

There is a cure written into the law: if the foreign payee itself files an Indian income tax return disclosing the payment, pays tax on it, and furnishes a certificate confirming that, the disallowance is deemed cured. In practice this rarely helps here. A vendor whose own position, and the case law above, is that the payment isn't taxable in India at all has no reason to file an Indian return reporting it, so this cure exists on paper but is unlikely to be available for a mainstream cloud or SaaS bill specifically because the case law favours the payer.

Even where you're confident no TDS is owed, a bank or an auditor may still want to see the DTAA-adjacent paperwork, a No-PE declaration and a current Tax Residency Certificate, on file. How easy that is to get varies by vendor rather than being a blanket "cloud companies won't provide this." Some major vendors now run a genuine self-serve process (a billing-portal tax-documents section covering the certificate and Form 10F for a given year); for others, no equivalent standing process is publicly documented, and a request may need to go through account support instead, with no guaranteed turnaround. If your company runs bills across several providers, treat this as a per-vendor checklist item, not an assumption that applies the same way to all of them.

The recurring pattern isn't a company deliberately dodging TDS, it's nobody ever asking the question in the first place, because the invoice looks like any other subscription and nothing about it prompts a withholding-tax review. The exposure surfaces later, at an audit or a funding round's diligence, as a disallowance on expenses going back several years, not a single missed filing. A defensible position here means an actual documented analysis of why Section 195 doesn't apply to your specific vendor and service, referencing the current case law, not silence that looks the same either way until someone asks.