Vat / Service tax on Digital Royalty

[Guest]

We have receiving digital royalty for music  content  from various parties/ telco’s  . I  would like to know which  taxes applicable for digital royalty  income? ( Service tax  or  VAT  or  Both  )

[YAGAY andSUN]

Service would be applicable on such transactions as VAT laws does not recognised Royalty as Intangible goods at par with DEPB, Advance Authorisation untill unless you are selling the music content on some sort of physical medium such DC, DVD etc.

 

AI Summary

Service tax applies to digital music royalties; VAT only applies when content is sold on a physical medium. Digital receipts for music royalties are taxable as services and treated as service supplies; VAT does not ordinarily apply to royalty receipts for intangible digital content, except where the music is transferred or sold on a tangible physical medium such as a CD or DVD, which may attract VAT characteristics.