gst on song producers

[AIJAZ KAZI]

sir/madam,

can some one please help in fing out the gst criteria for song producers .Mean song producer is suppose to take gst registration or not.who is suppose to pay gst and in what form rcm o r fcm .because song producer is just investing money and as the song is ready he will by way of agreement hand over the song to zee tv against which he will receive royalty.so what will be the gst standing(zee tv or song producer). please help me out

[Sadanand Bulbule]

For exhaustive discussion on the subject issue, refer Issue Id:119077 dated: 19-4-2024.

[YAGAY andSUN]

The GST (Goods and Services Tax) standing for a song producer in the situation you've described involves a few key considerations. Below, I will break down the different aspects of GST registration, tax liability, and the relevant mechanism, especially focusing on who will pay GST and whether it will be under RCM (Reverse Charge Mechanism) or FCM (Forward Charge Mechanism).

1. GST Registration for Song Producers:

The need for GST registration depends on the turnover and the nature of the business:

• Threshold Limit: If the aggregate turnover of the song producer exceeds ₹20 lakhs (₹10 lakhs for special category states), they are required to register for GST.
• Nature of Supply: Since the song producer is creating and selling intellectual property (songs) and possibly receiving royalty, it is important to consider that such a transaction might be treated as a supply of service under GST.
• Even if the turnover is below the threshold, the producer may voluntarily opt for GST registration.

2. Nature of the Transaction:

In your scenario, the song producer is investing in creating the song and then handing it over to Zee TV in exchange for royalty. This is typically a license agreement where the producer licenses the intellectual property (the song) to Zee TV for usage.

The key issue is whether the producer is providing a service or transferring goods. In this case, it's most likely to be licensing of intellectual property (the song) to Zee TV, which is treated as a service under GST.

3. Who Will Pay GST?:

• Song Producer's GST Liability: If the song producer is registered for GST, they will charge GST on the royalty or licensing fee they receive from Zee TV. This means that the song producer will issue an invoice to Zee TV and charge GST at the standard rate of 18% (if the song is considered under the category of “Intellectual Property Rights (IPR)” or service).
• Zee TV's Role: Zee TV will be the recipient of the service (the license for the song), and they will be liable to pay GST on the royalty amount to the song producer. Zee TV will have to pay the GST under FCM (Forward Charge Mechanism), meaning they will pay GST along with the royalty when the song producer invoices them. If the song producer is registered under GST, Zee TV will receive a tax invoice from the producer.

4. Reverse Charge Mechanism (RCM) or Forward Charge Mechanism (FCM)?:

• RCM: Under the Reverse Charge Mechanism, the recipient of the service (Zee TV, in this case) would be liable to pay GST. RCM is typically applicable in cases where the service provider is unregistered, or in certain specific services outlined by the GST laws. In your scenario, RCM does not apply as it is a regular licensed service from a registered producer to a registered recipient (Zee TV).
• FCM: Under FCM, the song producer is responsible for charging GST on the licensing fee/royalty received from Zee TV. This means the song producer will issue an invoice with GST included, and Zee TV will pay that GST along with the royalty amount.

5. Royalty for Licensing of Intellectual Property:

• Licensing of intellectual property is considered a service under Section 9(1) of the CGST Act, 2017, and the relevant Harmonized System Nomenclature (HSN) code is 9973 (for licensing of intellectual property rights).
• The GST rate on licensing of intellectual property is typically 18%.

6. Key Considerations:

• Song Producer's GST Registration: If the song producer exceeds the threshold limit or is engaged in continuous business, they will need to obtain GST registration.
• Zee TV: Zee TV, being a business receiving the song license, will pay the GST under FCM on the royalty amount to the song producer. If Zee TV is registered under GST, they can claim the input tax credit (ITC) on the GST paid, subject to the conditions under GST law.
• Payment Timing: The GST liability arises when the song producer invoices Zee TV for the royalty, and Zee TV will need to pay GST on that royalty amount.

Conclusion:

• Song Producer's GST Liability: The song producer will charge 18% GST on the royalty or license fee they receive from Zee TV, under FCM (Forward Charge Mechanism).
• Zee TV's Responsibility: Zee TV, as the recipient of the service, will pay GST on the invoice issued by the song producer. Zee TV will be liable for the 18% GST under FCM.
• GST Registration: The song producer needs to register for GST if their turnover exceeds the threshold limit, or if they are voluntarily opting for it due to the nature of their business.

In this arrangement, the song producer will be the one charging GST, and Zee TV will be paying it on the licensing/royalty fee.

[AIJAZ KAZI]

thank you very much experts

[Shilpi Jain]

If the song producer/composer is transfering the copyright then he would not be liable and the person purchasing will be liable under RCM

[Yash Shah]

According to entry 9 of the N/No. 13/2017 - CT(R), Supply of services by a music composer, photographer, artist or the like by way of transfer or permitting the use or enjoyment of a copyright covered under section 13(1)(a) of the Copyright Act, 1957 relating to original dramatic, musical or artistic works to a music company, producer or the like, is chargeable to tax under RCM.

Moreover, entry 34(vi) of the N/No. 11/2017 - CT(R) prescribes a rate of 18% (9% CGST+9% SGST) to Recreational, cultural and sporting services other than (i), (ii), (iia), (iii), (iiia), (iv) and (v) of entry 34 under heading 9996, which includes services related to music recording.

In this case, the service received by the song producer from the music composer & artists is covered under N/No. 13/2017, therefore, the song producer is required to take registration and pay tax at 18% under RCM.

On the other hand, since the supply of song on royalty to any company is not covered under N/No. 13/2017, therefore while supplying the song on royalty, the song producer is required to charge GST from the recipient and pay the same under FCM.

AI Summary

GST Rules for Song Producers: Mandatory Registration, 18% Tax Rate on Copyright Transfers and Royalties A song producer's GST liability depends on turnover and transaction nature. If aggregate turnover exceeds Rs. 20 lakhs, GST registration is mandatory. When transferring song rights to a media company, the producer typically charges 18% GST under Forward Charge Mechanism. The recipient pays GST on the royalty invoice. Specific GST treatment varies based on copyright transfer and service type, with potential variations in Reverse Charge Mechanism application.