Category - Knowhow fees, Service Tax

[Sanjeev Sharma]

Under which category service tax is applicable on Technical knowhow fees payable to foreign collaborators ? They will give training to Indian staff and as well as manuals. Further, they will allow Indian co. to use their software for operations. Fees is fixed in absolute amount and will be paid in three instalments.

Posts / Replies

[YASHAVANTH R.M.]

Under Intellectual property Services the service provided on Technical knowhow fee is liable to pay service tax. After introduction of sec.66a w.e.f. 19th April 2006 under reverse charge mechanisam Service recepient is liable to pay service tax on such service. Service tax is exempted on R & D cess paid in relation to such Intellectual Property Service.

[Sanjeev Sharma]

There is no IPR. Knowhow fees is essentially for training of indian staff, manuals and methodologies for provision of special auditing services.