10 September 2014
Royalty has been defined to mean consideration for transfer of rights in respect of or for use of intellectual property viz. patent, invention, model, design, secret formula, process or trade mark and similar property. It includes consideration for imparting of information concerning the working or use of those properties and also for imparting of information concerning technical, industrial, commercial or scientific knowledge or skill. It makes no difference whether the consideration is by way of lump sum payment or in the form of recurring payments based on production or any other factor. It, however, does not include an income which arises from the transfer of the asset itself and is liable to be taxed in the hands of the recipient as 'Capital Gain'.
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