Financial Daily from THE HINDU group of publications
Friday, Sep 17, 2004
Financial Daily from THE HINDU group of publications Friday, Sep 17, 2004 |
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Industry & Economy
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Taxation Service tax only for IPRs under Indian laws K. R. Srivats
New Delhi , Sept. 16 THE Finance Ministry has now held that intellectual property rights (IPRs) such as integrated circuits or undisclosed information would not be covered under "taxable services" as these rights are not covered or prescribed under Indian law. The Revenue Department has made it clear that IPRs covered under Indian law in force at present alone, are chargeable to service tax. It has also clarified that there would be no service tax on permanent transfer of IPRs. With effect from September 10, intellectual property services (other than copyrights) have been brought under the service tax net. In an internal instruction to its field formations, the Revenue Department has said that the definition of taxable services includes only such IPRs (except copyright) that are prescribed under law for the time being in force. "As the phrase `law for the time being in force' implies such laws as are applicable in India, IPRs covered under Indian law in force at present alone are chargeable to service tax," it said.
On the permanent transfer of IPRs, the Finance Ministry has held that such transfer does not amount to rendering of service. "On such transfer, the person selling these rights no longer remains a `holder of intellectual property right' so as to come under the purview of taxable service. Thus, there would not be any service tax on permanent transfer of IPRs," the Revenue Department said. Further, in cases where a transfer or use of an IPR attracts cess under Section 3 of the Research and Development Cess Act, 1986, the department has held that the cess amount so paid would be deductible from the total service tax payable.
More Stories on : Taxation | IPR
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