Royalty and Rent

[Guest]

Hi I have a question,

A factory is leased out on rent and royalty is charged on the no of units produced.

My question is

1 Royalty charged is not covered under IPR. Hence is the amount received as royalty on goods manufactured come under service tax.ambit?

2 Is the 10 lakh exemption amount on service tax a combination of rent and royalty.

Thanks

[Mahir S]

1) Yes

2) No

AI Summary

Royalty on goods: royalty charged on production is taxable and cannot be combined with rent for exemption purposes. Receipts characterised as royalty on goods manufactured (not linked to intellectual property) are treated as taxable services under service tax; rent for leasing factory premises and royalty are distinct taxable heads and cannot be aggregated to claim a single monetary exemption threshold.