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GST rate on permanent transfers of IPR in respect of goods has been increased by the CBIC
the government must issue clear instructions to avoid future controversies, tax avoidance, and subsequent litigation, as well as proper compliance to promote ease of doing business with regard to applicability of GST on Intellectual Property (IP) right
Permanent transfers Vs Temporary transfer : Supply of goods or services?
- Under the Heading 9973(ii) uses the words “Temporary or permanent transfer or permitting the use or enjoyment of IRP under Supply of services. Prima facie, this gives an impression that permanent transfer of Intellectual Property right shall also be treated as supply of services in the goods and services tax regime.
- There was ambiguity as to treatment because of rate of GST to be applied for permanent transfer of IPR is 18 percent if treated as a "supply of services" and 12 % if treated as a "supply of goods." This is now in line with the GST rate on permanent transfers of Intellectual Property Rights ("IPR") in respect of products, which has been increased from 12% to 18% and bringing it in line with the supply of services.
Before amendment via GST Notification By CBEC:
- Permanent transfer of Intellectual Property (IP) right in respect of Information Technology software : 18%:
- In Case of Permanent transfer of Intellectual Property (IP) right in respect of goods other than Information Technology software : 12%:
After amendment via GST Notification By CBEC:
- GST rate on permanent transfers of IPR in respect of goods has been increased by the CBIC.
- Permanent intellectual property law transfer is not regarded as a provision of service. Despite the fact that the applicable tax on both permanent and temporary transfers of intellectual property rights is now the same, the GST law has clarified that only permanent transfers of intellectual property rights are deemed supplies of commodities and are taxed appropriately.
- Permanent transfer of IPR whether of goods or IT software shall be taxable @ 18%: Deletion of entry permanent transfer of Intellectual Property (IP) right in respect of goods other than Information Technology software” and prescribing of entry “Permanent transfer of Intellectual Property (IP) right” which is taxable @ 18%. Now therefore, any permanent transfer of IPR shall be taxable @ 18% Notification : 13/2021-CT (rate) dt. 27.10.2021 (Seeks to amend Notification No. 01/2017 – Central Tax dated 28.06.2017)
- So Conclusion is GST rate on permanent transfer of IPR on goods by increasing GST rate from 12% to 18% & made it at par with supply of services.
