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GST applicability on Brand/ logo usage by group companies, Goods and Services Tax - GST |
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GST applicability on Brand/ logo usage by group companies |
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I. As per SCHEDULE-1 (Section-7) ACTIVITIES TO BE TREATED AS SUPPLY EVEN IF MADE WITHOUT CONSIDERATION: 2. Supply of goods or services or both between related persons or between distinct persons as specified in Section 25, when made in the course or furtherance of business : II. To allow the use of brand name/ usage of logo to another person (related party/ distinct person) is supply of service. Query: 1. Whether GST is applicable on use of brand name/ logo by distinct person/ related party? 2. How to decide the valuation (as market value is not readily available)? (further in case, the receipient (distinct person/ related party) is not eligible to take ITC (builder) then the 2nd proviso to rule 28 will not useful.) 3. Whether, in case no valuation can be decided, the valuation mechanism fails and hence no gst? Regards Posts / Replies Showing Replies 1 to 8 of 8 Records Page: 1
Sir,
The specific query/ issue is related to : 1. Whether GST is applicable on use of brand name/ logo by distinct person/ related party? (related party means the group company) 2. How to decide the valuation (as market value is not readily available)? (further in case, the receipient (distinct person/ related party) is not eligible to take ITC (builder) then the 2nd proviso to rule 28 will not useful.) 3. Whether, in case no valuation can be decided, the valuation mechanism fails and hence no gst? Regards
Whether this brand name/ logo is owned by a particular distinct person? or by the entire organisation as a whole?
The Logo/ Brand name is owned by say ABC Pvt. Ltd. having office at Mumbai and used by the entire ABC group companies (separate 10 firms/ companies) across India. And The Logo/ Brand name is owned by say ABC Pvt. Ltd. having office Mumbai and used by the all branches of ABC Pvt Ltd (10 branches in other states).
The definition of service being defined so widely under GST. The service could be of permitting to use the brand name. Is the brand name registered? If yes, then in whose name. All this also will indicate that allowing the other entities to use the same brand would be in the nature of service. If there is no open market value and also if cost is not available then one can take a stand that there is no valuation and thereby levy fails.
Similar was the issue with corporate guarantee. There was no valuation available to tax it. Hence, recent rule was introduced to bring in the valuation to enable the government to tax it. In the same manner - stand that no valuation exists and thereby there can be no levy can be taken for brand name usage.
Hello Shilpi Jain madam, Padmanathan Kollengode sir 1. The Logo is registered logo in the name of ABC Pvt Ltd having office at Mumbai 2. Cost of registration is the cost available as on date. And henceforth after registering logo, all branding is done by ABC Pvt Ltd having office at Mumbai. (just want to highlight the news in Business Standard "Banks receive GST notices for use of brand name by branches, subsidiaries") Now in such case whether GST can be levied and what shall be the valuation where: 1. The registered Logo/ Brand name is owned by say ABC Pvt. Ltd. having office at Mumbai and used by the entire ABC group companies (separate 10 firms/ companies) across India. and 2. The registered Logo/ Brand name is owned by say ABC Pvt. Ltd. having office Mumbai and used by all the branches of ABC Pvt Ltd (10 branches in other states). Is it possible to charge some amount for usage of the registered logo/ brand name (but then that value will be arbitrary) and charge gst on the same, to conclude the issue] Please guide me. Regards
If the recipient company / branch offices are able to take credit then consider any value for the purpose of invoicing. This will save you from non-compliance. If credit is not eligible then open market value to be considered. Now, if you cannot determine the open market value then approach your jurisdictional GST department as per section 60 of CGST Act, 2017 and request for the valuation. Page: 1 |
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