Taxation of Intellectual Property Rights: Taxing the Intellect

Duration of the course:
415 minutes (comprising of 4 episodes)

Course Background:
In the modern world, Intellectual Property Rights (IPRs) have become one of the most valuable assets for many businesses. Most of the leading multinational companies (MNCs), and even startups, in all the major sectors like pharmaceuticals, chemicals, biotechnology, software, automobile, electronics, defence and other high-tech manufacturing and services derive a substantial part of their market value from intangibles like patents, copyrights, designs, trademark, and trade secrets.  Law relating to IPRs has evolved over a period of time to keep pace with the new intangibles and novel transactions involving intangibles emerging in the business world. Pertinently, recent legislation introduced in India like the Protection of Plant Varieties and Farmers’ Right Act, 2001 and the Biological Diversity Act, 2002, and the proposed Personal Data Protection Bill, 2018 has added new dimensions to this already complex field. The transactions involving or incorporating IPRs are difficult to understand not only because of complexity in comprehending the underlying IP but also due to ambiguities in the laws governing the protection of such IP.

Furthermore, if the subject matter of intellectual property and the law relating to IPR are intricate, taxation of transactions involving IPR just multiplies the challenges manifold. The inherent nature of intangibles makes many of the traditional principles or concepts of taxation relating to situs, valuation, point of taxation, characterization of income, etc. redundant or at least difficult to apply. Needless to say, the tax laws have not evolved to deal with the fast-changing world of IPRs, resulting in a whole lot of disputes under almost all major tax laws like Income Tax, Customs, Service Tax, Sales Tax/ VAT and GST. Considering that these disputes cut across all industry sectors involving both domestic and cross-border transactions, handling these mind-boggling issues requires a unique blend of knowledge of technology/ laws relating to IPR and expertise in interpreting the tax laws.

What shall the course cover?

Against this backdrop, Taxsutra presents a unique four-part module on “Taxation of Intellectual Property Rights: Taxing the Intellect” in association with premier law firm Lakshmikumaran & Sridharan (L&S). Over the course of this series, Legal Stalwart Mr V. Lakshmikumaran (Founder and Managing Partner, L&S) has lead a team of IPR and Tax experts from L&S in unravelling the mysteries engulfing the taxation of IPRs. The module has covered an array of topics which includes the following:

• Basics of the IPR laws prevalent in India and outside India
• Taxation of transactions in IPRs involving assignment, licencing and services
• Leasing of equipment embedded with IPRs
• R&D Services involving the creation or improvement of IPRs
• Franchise and other trademark licence arrangements
• Taxation of software
• Issues involving Copyrights including Publishing Rights & Broadcasting Rights
• Infringement of IPRs
• Special tax regimes/ incentives for IPRs in India
• IPR: Goods vs Services – controversies in GST and Customs
• Situs of IPR – Implications in Income Tax, GST and Customs
• Disputes relating to Advertising, Marketing & Promotion (AMP) expenses
• Use of trademarks without consideration by group companies – Income Tax and GST disputes
• Sale, exhibition and distribution of cinematographic films – Issues in Income tax, GST and Customs
• Tax issues relating to performer’s rights and brand endorsement arrangements
• Protection of Plant Varieties Act (PVP) and Biological Diversities Act (BDA)
• Inclusion of software in the valuation of imported hardware
• Additional software licenses – treatment under Customs, GST and Income Tax
• Downloading and replication of software: Tax Controversies