06 January 2014
My client has paid Rs.25,00,000/- as license fees for Digital Content Sharing (Images and E Magazines). Whether this license fees amounts to royalty?
Whether on this amount Rs.25 Lacs TDS needs to be deducted?
06 January 2014
It depends on the treatment given and the number of years benefit attached to such licence fee. If you have to pay every year this licence fee then this a revenue expenditure and if the benefit is for more than 3 years then it is a capital expenditure. If it is a capital expenditure then no need to deduct TDS. If it is a revenue expenditure and every year it is to be paid then you have to see whether the party has charged service tax or vat if vat is charged then it is purchase and sale of goods and if only service tax has been charged then it is under 194J and you have to deduct tax.
06 January 2014
Thanks a lot Agarwal Sir for your prompt reply.
This License Fees is paid for Five Years and we are amortising the same on monthly basis and the same is shown in the books of accounts as advance license fees. The party has not charged the service tax at the time of raising of invoice but in later in the current year they are raising debit note for the same.
CAclubindia
