Royalty or License Fees
This query is : Resolved
14 July 2020
Hi,
In case of copyrighted software product , distributors/resellers pay a fixed amount/fixed % to the copyright owner for every sale. In this case fixed amount/fixed % on every sale will be in nature of royalty or sales? Also there can be multiple distributors for same copyrighted software product.
Also if royalty/sales can this fall under presumptive scheme?
Regards,
In case of copyrighted software product , distributors/resellers pay a fixed amount/fixed % to the copyright owner for every sale. In this case fixed amount/fixed % on every sale will be in nature of royalty or sales? Also there can be multiple distributors for same copyrighted software product.
Also if royalty/sales can this fall under presumptive scheme?
Regards,
14 July 2020
It will be in the nature of royalty. It will not fall under presumptive scheme.
14 July 2020
Thanks for the opinion
What if copyright owner sells directly to end users ? Then it will be license fees? How will that be taxed?
What if copyright owner sells directly to end users ? Then it will be license fees? How will that be taxed?
14 July 2020
Yes, if software is sold directly it will be treated as sale.
14 July 2020
Will the same apply if same is sold through a distributor or reseller? i.e Copyright owner to distributor/reseller and reseller to end user. Will this be sales?
14 July 2020
Yes this will be sales.
14 July 2020
If you are directly selling to user and charging the licence fees then you can show it as a sale and report u/s 44AD.
However if you are receiving royalty/commission from your distributor on every sale then it cannot be presumptive income. Books of Accounts have to be maintained.
However if you are receiving royalty/commission from your distributor on every sale then it cannot be presumptive income. Books of Accounts have to be maintained.
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