"intellectual property right"means any right to intangible property, namely, trade marks, designs

Indian Service Tax

Intellectual Property Services

Effective Date: 10/09/2004.

Authority: Finance (No.2) Act, 2004

Rate of Service Tax: 10% - Cess 2% of 10% = 0.2. Total ST = 10.2%.

Definitions

"intellectual property right"means any right to intangible property, namely, trade marks, designs, patents or any other similar intangible property, under any law for the time being in force, but does not include copyright, [Section 65(55a)]

"Intellectual Property Service" means -

• transferring, whether permanently or otherwise or

• permitting the use or enjoyment of, any intellectual property right, [Section 65 (55b)]

Taxable service: Taxable service means any service provided to any person, by the holder of intellectual property right, in relation to intellectual property service, [Section 65 (105) (zzr)]

Value of taxable service: Gross Amount

Exemptions: See Notification No. 18/2004~ST, dt. 10/9/2004 at the end of the Chapter of "Airport Services".

• Copyright

• Authors

• Legal Services

Person liable to pay: Construction Service Provider

Head of Account: To be issued.

Changes from 10/9/2004

F.No. B2/8/2004-TRU, Date: 10-9-2004

09. Intellectual property services (other than copyrights):

9.1 Intellectual property emerges from application of intellect, which may be in the form of an invention, design, product, process, technology, book, goodwill etc. In India, legislations are made in respect of certain Intellectual Property Rights (i.e. IPRs) such as patents, copyrights, trademarks and designs. The definition of taxable service includes only such IPRs (except copyright) that are prescribed under law for the time being in force. As the phrase 'law for the time being in force' implies such laws as are applicable in India, IPRs covered under Indian law in force at present alone are chargeable to service tax and IPRs like integrated circuits or undisclosed information (not covered by Indian law) would not be covered under taxable services.

9.2 A permanent transfer of intellectual property right does not amount to rendering of service. On such transfer, the person selling these rights no longer remains a 'holder of intellectual property right' so as to come under the purview of taxable service. Thus, there would not be any service tax on permanent transfer of IPRs

9.3 In case a transfer or use of an IPR attracts cess under Section 3 of the Research and Development Cess Act, 1986, the cess amount so paid would be deductible from the total service tax payable. (refer notification No. 17/2004­ST, dated 10/09/2004).

Notifications

Exemption

[Notification No. 17/2004-ST, dt. 10/9/2004]

In exercise of the powers conferred by sub-section (1) of Section 93 of the Finance Act, 1994 (32 of 1994), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts the taxable service provided by the holder of intellectual property right to any person, in relation to intellectual property service, from so much of the service tax leviable thereon under Section 66 of the said Act, as is equivalent to the amount of cess paid towards the import of technology under the provisions of Section 3 of the Research and Development Cess Act, 1986 (32 of 1986) in relation to such intellectual property service.

[Notification No. 18/2004-ST, dt. 10/9/2004]For full text see under "Airport Services".