Legal Question in Tax Law in India

Re: Service tax on royalty to foreign parent company

Please give more details. or call on cell 09426101233.

Thanks,

with regards,

Bankimchandra Shah

Advocate, Gujarat High Court,

Surat.

Re: Service tax on royalty to foreign parent company

Hi

Since no details are available in your query, we assume that the royalty payment to your foreign parent company is for some IPR service (Trademarks, designs, patents etc.).

IPR services are leviable to Service Tax under the Finance Act, 1994. Any transferring, permitting the use or enjoyment of such intellectual property rights is liable to service tax.

As per the relevant provisions if the service provider is a non-resident or a foreign company who does not have any office in India, it is required that the person receiving the service in India is the person responsible for paying the service tax.

Therefore, Royalty payment to the Foreign Parent Company (for availing IP services) will be subject to Service Tax in the hands of Indian subsidiary of such foreign parent.

Thanks & Regards

Srinivas Kotni

CORPORATE LEXPORT

Advocates & Legal Consultants

[email protected]

www.indiamart.com/corporatelexport

9811282863