Tds on purchase of patent from foreign company

Lokesh Bahl (CA Practice ) (72 Points)

24 October 2015  

Dear Experts,

I need your advise on a cross border transaction, kindly refer the below case

Case: An Indian Pvt Ltd Company is buying a Patent from an Israel based Company, Money will be paid from India directly to Israel Based Company and patent will be used for production in India, the total consideration that is to be paid by Indian Company is for Patent, Know How related to Patent and Some equipments. (but Cost of Patent forms majority part of total consideration)

Question: My understanding is that Patent is an Intangible Asset and doesnt come under the category of "Fee for Technical Service" or "Royalty", so will the Indian Company be required to deduct the TDS on this Payment?

 

Best regards

CA Lokesh Bahl