Withholding Tax On Royalty

Hello Connections,?

Let’s discuss the implications of “ Withholding tax on Royalty “

Meaning of Royalty - Consideration for transfer of any right / imparting of any information/use of any?

patent, copyright, design, trademark, brand, process, formula

Industrial, technical, commercial, scientific knowledge, experience, skill

Literacy, artistic, scientific work including films / videotapes for use in connection with television / tapes / radio broadcasting, sale / distribution / exhibitions of cinematographic films.

Excluding?any income chargeable under the head capital gain.

Withholding tax on Royalty

Withholding Tax is the amount of tax that is required to be deducted by the payer before making any payment to the payee and the same tax amount is deposited with the government as stipulated in respective Acts.?

In the context of royalty, withholding tax is the tax that is supposed to get deducted while making payment made for royalty?

From?Resident to Resident?- section 194J of IT Act attracts i.e 10%?

From Resident to Non-Resident (except section 44DA of IT Act ) - section 115A of IT Act attracts i.e 10% or section 195 of IT Act attracts i.e 10% or Rate as per DTAA; whichever is more beneficial to assess.

From Non-Resident to Non-Resident (except section 44DA of IT Act) - section 195 of IT Act attracts i.e 10% or Rate as per DTAA; whichever is more beneficial to assess.

Note:?Withholding tax attracted only if Royalty is taxable in India (i.e royalty accrues, arises, received, deemed to accrues, deemed to arise, or deemed to be received in India)

Note: Here, IT Act means income tax act 1961.