Service tax on royalty

[MITSUI PRIME ADVANCED]

Dear Sir,

PL. advice to us we have made one payment form India to Japan related to Royalty Pl. advice to us in such cases service tax attract.

and in service tax law which category is covered ?

Royalty 1 percent paid on fourth qty  Sales .

Pl. advice thanks for your co-operation in advance.

Thanks & Regards

Arjun Sachdeva

[YAGAY andSUN]

Dear Arjun,

Please check the Place of Provisions of services Rules in this regard.  You would have to pay the service tax in cash and you may avail the CENVAT credit on input services.

Regards,

Team YAGAY & SUN

(Indirect Tax Consultants)

[Arup Das]

Dear Arjun Sachdeva

Yes.Service tax is applicable on Royalty.

Under Intellectual property service you need to pay service tax on reverse charge and further you can avail the credit.

At the time of making Service tax payment on Royalty you can get a deduction on R & D cess.

Regards

Arupp

AI Summary

Service tax on royalty: reverse charge requires the Indian recipient to pay tax in cash and can claim CENVAT credit. Royalty payments to a non resident are subject to service tax as an intellectual property service under the reverse charge mechanism, requiring the Indian recipient to pay tax in cash while availing CENVAT credit on eligible input services; verify Place of Provision of Services Rules and apply permitted deductions, including an R&D cess adjustment, when computing the liability.