Tax on Payment of Royalty

[Pradeep Kaushik]

Respected All,

I have some queries stated as under:

1. We are paying Royalty , on our Gross Sales to our parent Company in South Korea, Is it really covered by Service Tax Act. Is it fall under Intellectual Property Services. . Please Explain with Section and circulars, if any.
2. Can we take the Cenvat credit for the Service Tax, we deposited on Royalty payments. Please provide the notification/ circular for justification.
3. Is R&D Cess also applicable to us. If Yes, Do we have to take any registration for deposit of  R&D Cess. Where we have to deposit this Cess. Please describe the procedure in detail.
4. Is Cenvat available for R & D Cess also.

Please reply.

Best Regards.

Pradeep kaushik

[YAGAY and SUN]

Please Check IPR service in this regard.  Further, if you are paying R&D Cess, then, it is deductible from the total payment of service tax.  Further, kindly go through Notification No. 46/2011- ST dated 19^thSeptember, 2011 pertaing to R&D Cess in this regard.

AI Summary

Intellectual Property Services: royalty payments can attract service tax, and R&D Cess is deductible from tax liability.
Royalty payments to an overseas parent are queried for treatment as Intellectual Property Services and potential service tax liability; the payer asks whether service tax on such royalties qualifies for Cenvat Credit. The applicability, registration, deposit procedure, and Cenvat availability in respect of R&D Cess are also queried. A respondent advised checking IPR service classification and noted that R&D Cess is deductible from the total service tax liability, citing a relevant notification, without providing detailed procedural or statutory citations.