Royalty
This query is : Open
05 February 2011
Dear Friends!
Ours company is engaged in manufacturing of Auto parts. We avail services w.r.t to design and drawing through mail for a foreign company which has no existence in India. Even that foreign company do not come to India for providing its technical support. We also do not use its brand name. The final products are sold in our brand name only.
Understanding with the Foreign Company:
We have to pay as Royalty @ 2% on the basic sales price of the product which are manufactured by using its design and drawing.
My Query:
1. Is the payment of Royalty attract Service Tax?
2. If yes, then what is its procedure to be followed?
3. Can the service tax if so charged be availed as MODVAT Credit?
Your earlier response to this will be highly appreciable.
Thanks
Ours company is engaged in manufacturing of Auto parts. We avail services w.r.t to design and drawing through mail for a foreign company which has no existence in India. Even that foreign company do not come to India for providing its technical support. We also do not use its brand name. The final products are sold in our brand name only.
Understanding with the Foreign Company:
We have to pay as Royalty @ 2% on the basic sales price of the product which are manufactured by using its design and drawing.
My Query:
1. Is the payment of Royalty attract Service Tax?
2. If yes, then what is its procedure to be followed?
3. Can the service tax if so charged be availed as MODVAT Credit?
Your earlier response to this will be highly appreciable.
Thanks
05 February 2011
1. Yes it attract service tax under the head design services.
2. As service receiver , you have to deposit the service tax in this case.
3. Cenvet credit is allowed of service tax paid.
2. As service receiver , you have to deposit the service tax in this case.
3. Cenvet credit is allowed of service tax paid.
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07 February 2011
Thanks for your earlier response!
In continuation to this query I would like to have clarity on
1. Under which section shall we take the credit of the Service Tax Paid
In continuation to this query I would like to have clarity on
1. Under which section shall we take the credit of the Service Tax Paid
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