Whether GST under Reverse Charge Mechanism is applicable on Royalty paid to Authors? Will GST be paid by Publisher if the payment is made to legal heirs of the author or when the recipient of royalty is an University or Corporate Entity – domestic or foreign or trust, etc?
CBIC vide Notification No 13/2017 – Central Tax (Rate) dated 28th June 2017 had issued notification notifying various categories of supply of services, supplied by a person, the whole of central tax leviable under section 9 of the said Central Goods and Services Tax Act, shall be paid on reverse charge basis by the recipient of the such services
Before we procced to discuss on applicability of GST on Royalty paid by the publisher to authors, let us analyze the legal provisions.
Reverse Charge Mechanism – Sec 2 (98) of CGST Act, 2017 – “reverse charge” means the liability to pay tax by the recipient of supply of goods or services or both instead of the supplier of such goods or services or both under sub-section (3) or sub-section (4) of section 9, or under sub-section (3) or subsection (4) of section 5 of the Integrated Goods and Services Tax Act;
Reverse Charge Mechanism on Specified category of Goods or Services – Section 9(3) of the CGST Act, 2017 –
“The Government may, on the recommendations of the Council, by notification, specify categories of supply of goods or services or both, the tax on which shall be paid on reverse charge basis by the recipient of such goods or services or both and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both.”
Notification No 13/2017 dated 28th June 2017 is issued as per provisions of Sec 9 of the CGST Act, 2017 notifying various categories of supply of services on which GST shall be paid by recipient of services.
Notification No 13/2017 dated 28th June 2017 –
| S. No | Category of Supply of Services | Supplier of Service | Recipient of Service |
| 1 | Supply of services by an author, music composer, photographer, artist or the like by way of transfer or permitting the use or enjoyment of a copyright covered under clause (a) of sub-section (1) of section 13 of the Copyright Act, 1957 relating to original literary, dramatic, musical or artistic works to a publisher, music company, producer or the like. | Author or music composer, photographer, artist, or the like | Publisher, music company, producer or the like, located in the taxable territory |
Analysis of the provisions:
Supply of Service by way of transfer or permitting the use or enjoyment of a copyright covered under clause (a) of sub-section (1) of section 13 of the Copyright Act, 1957 relating to original literary, dramatic, musical or artistic works to a publisher is covered under the provisions of Sec 9(3) of the CGST Act 2017 and Notf No 13/2017 – Central Tax (Rate) dated 28th June 2017.
If the services listed in notification is supplied by an author to the publisher, then GST shall be paid by the publisher under reverse charge mechanism.
The essence of the aforesaid provision is applicability of GST on specified services and not to whom payment is made or any quantum of payment.
It is immaterial as to who is the recipient of the consideration or beneficiary. There may be contractual obligation between the publisher and the author as to whom the payment is to be made. Applicability of GST under Reverse Charge Mechanism is dependent if the services are covered under Specified List of services as per provisions of Sec 9(3) and enumerated under Notf No 13/2017 – Central Tax (Rate) dated 28th June 2017.
Response to the Query –
| S. No | Supplier of Service | Recipient of Consideration | GST under Reverse Charge |
| 1 | Author | Author – Indian or foreign | Paid by Publisher |
| 2 | Author | Nominee of Author | Paid by Publisher |
| 3 | Author | Domestic or foreign company | Paid by Publisher |
| 4 | Author | Trust or University | Paid by Publisher |
Source- Notification No. 13/2017- Central Tax (Rate) and relevant provisions of CGST Act, 2017
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Author Bio
NOW I AM PAYING THE GST ON ROYALTY RCM BASIS CAN I CLAIM REFUND THE SAME OURS IS 100%EOU HENCE NO OUT PUT TAX
A mathematics book of an American author currently has to be imported for Indian purchases (printed in USA).
I have permission to print and distribute in India. GST is not applicable as it is an education book.
Do I have to get a GST number and quarterly file GST saying nil tax paid?
The books will be sold online on the website, Amazon, Flipcart.
Sir
Pls let me know the rate of GST under RCM which is to be paid by publisher as Royalty to author
HSN 997334 @18%