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Royalty or License Fees

This query is : Resolved 


In case of copyrighted software product , distributors/resellers pay a fixed amount/fixed % to the copyright owner for every sale. In this case fixed amount/fixed % on every sale will be in nature of royalty or sales? Also there can be multiple distributors for same copyrighted software product.

Also if royalty/sales can this fall under presumptive scheme?


It will be in the nature of royalty. It will not fall under presumptive scheme.

Thanks for the opinion

What if copyright owner sells directly to end users ? Then it will be license fees? How will that be taxed?

Yes, if software is sold directly it will be treated as sale.

Will the same apply if same is sold through a distributor or reseller? i.e Copyright owner to distributor/reseller and reseller to end user. Will this be sales?

Yes this will be sales.

If you are directly selling to user and charging the licence fees then you can show it as a sale and report u/s 44AD.
However if you are receiving royalty/commission from your distributor on every sale then it cannot be presumptive income. Books of Accounts have to be maintained.

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