Re about royalty expense

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vipin agrawal

vipin agrawal (Querist)
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30 December 2013 since no vat law provides royalty expense as vat exempted, it should be vatable??

Shudhanshu Agrawal

Shudhanshu Agrawal (Expert)
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30 December 2013 Please elaborate your ques.

Aashok Kumar Sharma online

Aashok Kumar Sharma online

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20 July 2025 Hey! About royalty expense and VAT:

Generally, royalty payments are considered as a kind of service or intangible asset usage fee rather than sale of goods.
VAT primarily applies on sale of goods, so royalty is usually not covered under VAT but may come under service tax (pre-GST era) or GST now.
Since VAT laws don’t specifically exempt royalty, it depends on the state laws — some states may levy VAT on royalty if treated as goods, others may not.
Most commonly, royalty payments are not subjected to VAT but under service tax (earlier) or now GST (under reverse charge in some cases).
Bottom line: Royalty is generally not VATable as it’s not a sale of goods. It’s more about services or intellectual property use.

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