jeet (student) (42 Points)
18 November 2009i want to know, if someone gets franchise from somebody. terms to pay 15% to franchiser on gross. if franchise gets 5 lac p.a will he has to pay service tax or not ? (franchiser gets more than 50 lac from other franchise)
like a person earns 5 lakhs per annum as franchisee and he gives royalty Rs75000/- @ 15%
For how much amount he has to pay service tax?
for 75000/-
for425000/-
or for 500000/-
Deeps
(Article Assisstant)
(2485 Points)
Replied 18 November 2009
FRANCHISE SERVICES
Effective date 1st July 2003.
Definitions:
"Franchise" means an agreement by which the franchisee is granted representational
right to sell or manufacture goods or to provide service or undertake any process
identified with franchisor, whether or not a trade mark, service mark, trade name or logo
or any such symbol, as the case may be, is involved.
"Franchisor" means any person who enters into franchise with a franchisee and includes
any associate of franchisor or a person designated by franchisor to enter into franchise on
his behalf and the term "franchisee" shall be construed accordingly.
Scope of taxable service shall include any service provided or to be provided to a
franchisee, by the franchiser in relation to franchise.
♦ License Production Agreements where principal allows production of goods bearing
his brand name, by another person, are liable to service tax under this category.
♦ If rights are granted for rendering services identified with the principal on his behalf,
such services by the principal to the service recipient are taxable.
Sandeep Pandey
(CA FINAL)
(1306 Points)
Replied 18 November 2009
Thanks Deepika for sharing.................
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