‘Royalty’: a Tax? : An Analysis of the Judicial Uncertainty and its Service Tax Implications

[Velpula Audityaa and Devansh Mani are both 4th year, B.A.LL.B (Hons.) Students at Symbiosis Law School, Pune] Whether royalty payable on minerals extracted  as provided for under section 9 of the Mines and Minerals (Development and Regulation) Act, 1957 is in the nature of tax is one of the questions pending before a nine-judge bench of the Supreme Court. Depending on the outcome, there will be...

Budget 2013: Taxation as a Solution to a Governance Problem

A couple of months ago, we had discussed the corporate governance issues that emerge when Indian subsidiaries of multinational companies pay substantial amounts to their parents in royalty. While we will have a chance to discuss the taxation issues in the Budget in greater detail, the proposal to increase taxation on such royalty payments stands out. The Finance Minister’s speech notes: 147...

Royalty Payments and Corporate Governance

In the past, the corporate governance discourse pertaining to Indian companies has revolved substantially around family owned businesses and government-owned (public sector) companies. Another type of companies that is quite prevalent in the corporate scenario, but usually does not receive specific attention, is Indian listed subsidiaries of multinational companies (MNCs). A significant...

Foreign Collaboration and Royalty Payments

Hitherto, Indian companies were allowed to make royalty payments to their foreign collaborators under the automatic route within certain limits. These involved payment for technology transfers of a lump sum fee of US$ 2 million and royalty of 5% on domestic sales and 2% for exports. Where no technology transfer was involved, royalty of up to 1% for domestic sales and 2% for exports was allowed...

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