Franchisee

[Guest]

Sir/Madam,

Whether the payment made for taking franchisee of a restaurant service is a capital payment and can this be treated as an assest and amortisation can be taken thereon.

and Whether receipt made under franchisee agreement for giving the francisee is chargeable to service tax????

Please respond with both the prospect

[Mahir S]

Sir,

Regarding your second query, the receipt made under franchisee agreement for giving the franchisee is chargeable to service tax. However, exemption is available if such receipt is less than ₹ 10 lacs p.a.

AI Summary

Service tax: receipts for granting a franchise are chargeable, with a small receipts exemption applicable to qualifying providers. Receipts under a franchise agreement for granting a franchise are chargeable to service tax, with an available exemption for relatively small annual receipts; the query whether payments to acquire a restaurant franchise are capital expenditure eligible for recognition as an asset and amortisation is raised but not answered in the reply.