Re about royalty expense
This query is : Resolved
30 December 2013
since no vat law provides royalty expense as vat exempted, it should be vatable??
30 December 2013
Please elaborate your ques.
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.
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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