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Temporary or permanent transfer of intellectual property Brings 12Percent GST

Q. We are producers and exporters of agro chemicals (e.g., pesticides and weedicides). In connection with production of our goods, we wish to import procedure technology to enhance the return of finished goods, together with decreased process/production time. The tech is normally erased in digital form with an choice to find a printed copy . Please let us understand the tax consequences.

This trade is transport of intellectual property. According to entrance no. 5(c) of Schedule II to the CGST Act, 2017,”temporary transport or allowing the use or enjoyment of any intellectual property right” is an agency. However, permanent transfer of intellectual property is taxed, curiously, as an agency in addition to goods. According to S.No. 17 of telling no. 82017-IT (Rate) dated June 28, 2017, temporary or permanent move or allowing the use or enjoyment of Intellectual Property (IP) directly in respect of products aside from information technology applications, below the Service Code 9973, brings IGST of 12 percent.

According to S.No. 1 Table from the telling no. 10/2017-IT (Rate) dated June 28, 2017, IGST on such an agency by means of a non-resident to some resident is payable by the receiver of this support under reverse charge mechanism. “Permanent transport of Intellectual Property (IP) directly in respect of products other than Information Technology applications”, falling below any Chapter is categorized as products additionally and brings exactly the identical IGST speed of 12 percent beneath S.No. 243 of Schedule II of this telling 1/ / 2017-IT (Rate) dated June 28, 2017. IP finds no reference in the Customs Tariff.


Q. Underneath the EPCG scheme, is it essential for salvation, the export profits ought to have been realised? Will exports created, for which payment hasn’t yet come , be counted towards discharge of export duty? Please provide the applicable provisions.


Para 5. 11 of HBP states”export proceeds will be realised in freely convertible currency except for deemed exports provides under Chapter 7. Exports to SEZ units /Provides to programmers / co-developers no matter money of realisation would likewise be counted for release of Export Obligation. Realization in the event of supplies to SEZ units shall be from foreign currency accounts of the SEZ unit” Appendix-5C of this HBP also needs the Chartered Accountant to definitely stipulate the exporter has filed e-BRC and the same happen to be confirmed.


Q. We had imported a product (ethyl alcohol: ITCHS Code-22072000), that falls under the Restricted List, obligation free under Advance Authorisation, according to Para 4. 18 (iv) of FTP, 2015-2020. But after export, the foreign purchaser has cancelled the export orders. The complete imported amount is lying together and we don’t have any export arrangement. Could we use this imported raw material to make the final product and market in the domestic marketplace, after paying Customs Duty, curiosity and 3 percent of CIF Value (according to Para 4. 49 (ii) of HBP, 2015-2020)? )


Yes. The stated Para 4. 49 of HBP clearly permits regulation of bona fide defaults in scenarios where limited items were imported under progress authorisation and stay unutilised in export production.

About the author

Richard Thompson

Richard Thompson

Richard's love for gadgets was probably triggered by an electric shock at the age of five while poking his finger into power sockets for no reason. He managed to destroy a few more desktops and phones until he was sent to England for school. Somehow he ended up in London, where he had the golden opportunity to buy a then senior editor a pint of lager, and here we are.
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