Tdayment to content authors

[Rajat Singhania]

In case of online education platforms, agreements are done with content authors and exclusive rights are transferred to the publishing platforms. In the instant case, an online education platform entered into a agreement with an author for providing video recordings of a course content and related support services. The consideration agreed to was divided into two parts: the first consisted of a guaranteed agreed value and the other part worked on a revenue sharing model under which the author would get a specific % of the revenue generated from the fee collected from subscribers.

Now, two question arises:

1. Would it be considered as sale of content or would fall under royalty income.

2. If it is under royalty, would GST on reverse charge be charged on it?

The online platform in question is an unregistered party under GST.

AI Summary

Online education platform's content deal classified as a sale, not royalty; GST reverse charge not applicable. An online education platform entered into an agreement with a content author for video recordings and related services. The payment was split into a guaranteed amount and a revenue-sharing model. Two questions arose: whether the transaction is a sale of content or royalty income, and if classified as royalty, whether GST on reverse charge applies. An expert clarified that it is a sale of content under OIDAR services, not royalty. Reference was made to CBEC's Flyer No.42 and a decision by the Authority for Advance Ruling in Tamil Nadu for further guidance. The platform is unregistered under GST.