• Home
  • Business
More

    GST demand on brand usage may lead to litigations: Experts

    Today's Latest

    Smriti Irani along with Bill Gates launch Bharatiya Poshan Krishi Kosh

    New Delhi, Nov 18 (ANI): Union Minister of Women and Child Development (WCD) and Textiles, Smriti Irani, along with...

    Yogi government is planning to change name of Agra city to Agravan

    Lucknow, Nov 18 (IANS) After changing the names of Allahabad to Prayagraj and Mughalsarai to Deen Dayal Upadhyaya Nagar, the...

    Justice Bobde takes oath as 47th Chief Justice of India

    New Delhi, Nov 18 (IANS) Justice Sharad Arvind Bobde on Monday was sworn in as the Chief Justice of the...

    Popular Today

    Can’t have greats of Indian cricket play in front of empty stands: Ganguly

    Kolkata, Nov 17 (IANS) BCCI President Sourav Ganguly said on Sunday that skipper Virat Kohli will be happy to see...

    Final decision on Maha govt formation in next 2 days: NCP

    Pune, Nov 17 (IANS) The Nationalist Congress Party (NCP) has said that a final decision on the formation of the...

    Intolerance, extremism destroying Pakistan: Bilawal

    Islamabad, Nov 17 (IANS) Pakistan Peoples' Party (PPP) chief Bilawal Bhutto on Sunday said that the country was facing worst...
    India Updates
    India Updates is an independent news & Information website. Follow us for regular updates on News and Information.

    GST Council focus now on easing compliance, curbing tax evasionNew Delhi, Oct 16 (IANS) Tax authorities’ demand for levying GST on brand usage by subsidiaries of a parent company or related party could lead to litigations and hit the earnings of these firms, experts said.

    With the government forming a high-level committee to review the indirect tax structure, tax experts hope the issue of imposing GST on brand usage by related parties would also be addressed.

    - Advertisement -

    At present, a large number of companies allow their subsidiaries or a related party to freely use the brand name and logo. Since this does not involve any payment, no GST is levied.

    The GST authorities, however, want companies to charge for brand and logo usage. The tax department wants the companies to put a value to their brands, charge related parties for the brand usage and pay 18 per cent GST.

    While maintaining that tax authorities are right in demanding tax on usage of brand names and logos, experts said that there are several practical problems. They maintain that bigger companies may not have any problem in putting a value to brand usage by related parties, but smaller firms with large number of subsidiaries could face problems.

    “Legally it is right but logically not. The law says that any supply of service between related parties is taxable,” said Rajat Mohan, Senior Partner, AMRG & Associates.

    Tax experts said that levy of tax on usage of brand name for a royalty has been a bone of contention between Value Added Tax and Service Tax authorities in the past as well.

    As per the indirect tax law, companies are now required to assign a value wherever they allow usage of brand names, logos, etc. to a related entity.

    Amit Bhagat, Partner, Dhruva Advisors, said that valuation of a brand or logo usage would not be a challenge wherever full input tax credit is available to recipient but a cost where such credit is limited or disallowed for certain business like banks.

    “Largely this would be an unexpected and unplanned tax cost as such and likely to become litigous, at least for such business entities,” Bhagat said.

    LEAVE A REPLY

    Please enter your comment!
    Please enter your name here

    Must Read

    Govt to set up North East Industrial Corridor: Rajnath

    Tawang (Arunachal Pradesh), Nov 14 (IANS) Defence Minister Rajnath Singh on Thursday said the government is planning to set up...

    Yogi government is planning to change name of Agra city to Agravan

    Lucknow, Nov 18 (IANS) After changing the names of Allahabad to Prayagraj and Mughalsarai to Deen Dayal Upadhyaya Nagar, the Yogi Adityanath government in Uttar...

    Justice Bobde takes oath as 47th Chief Justice of India

    New Delhi, Nov 18 (IANS) Justice Sharad Arvind Bobde on Monday was sworn in as the Chief Justice of the Supreme Court of India by...

    ‘Make in India’ hub Noida to churn over 30 cr mobiles in 5 yrs

    Noida, Nov 17 (IANS) The pace at which mobile manufacturing activity is growing in the Noida/Greater Noida area owing to the "Make in India" initiative,...

    Hindu, Muslim litigants against AIMPLB’s Ayodhya review plea

    Ayodhya, Nov 17 (IANS) The Hindu and Muslim litigants in the Ayodhya case have opposed the All India Muslim Personal Law Board's decision to file...

    More Articles Like This