Technical know How and Royalty payment

[Pradeep Kaushik]

Respected Sir,

  

We are 100% subsidary company of a Korean Co.

There is some queries:

 

1. Payment for Know How - Technicians Visited from South Korea to India for technical support ( For this purpose what documentation we require from Korea office and what are our Direct/Indirect Tax liabilities in this regard)

 

2. Payment for Initial Royalty-( For this purpose what documentation we require from South Korea and what are our Direct/ Indirect Tax liabilities in this regard).

 

Please suggest us your best advice in detail.

Best Regards.

 

Pradeep kaushik

 

 

AI Summary

Reverse charge on IPR services: recipient must pay service tax and remit R&D cess on royalty payments.
Payments to a foreign parent for technical know how and royalties treated as Intellectual Property Right services attract service tax under a reverse charge mechanism; the recipient must register as an IPR service recipient and pay service tax when the charge is booked or the royalty is paid. An R&D cess applies to royalty receipts but is eligible for abatement against the service tax on the royalty. Required documentation includes the agreement, and R&D cess is remitted by cheque with a challan through standard banking channels.