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Gst applicable on royalty fee

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Education Brand

1 Points Posted on 15 November 2018

Hi, I have taken Franchise of a preschool and now being charged GST on royalty fee. My queries are as follows : 1. Is GST chargeable on Royalty Fee for a preschool franchise? 2. How much GST is charged ideally as royalty fee for preschool ? 3.Should I get a GST number? 4. Can this be charged in terms of TDS? Suppose I pay 10% TDS n franchisee fees say around 30000/- so can the preschool brand owner claim the TDS amount and then refund me back the amount. In turn I can produce the TDS certificate. Is this valid? Would this cause any issues to the Preschool Owner or me as the Franchise Owner.

Replies (1)

Neha JAIN

58 Points Posted on 15 November 2018

Answer to question 1 is similar to following case law as per earlier service tax

Question . A society, running renowned schools, allows other schools to use a specific name, its logo and motto and receives a non-refundable amount and annual fee as a consideration. Whether this amounts to a taxable service?

Solution: Mayo College General Council v. CCEx. (Appeals) 2012 (28) STR 225 (Raj) The High Court held that when the petitioner permitted other schools to use their name, logo as also motto, it clearly tantamounted to providing ‘franchise service’ to the said schools and if the petitioner realized the ‘franchise’ or ‘collaboration fees’ from the franchise schools, the petitioner was duty bound to pay service tax to the department.