Some big companies, such as Tata and Mahindra, will now be asked to pay in crores as compensation. The reason behind this is that their names are being used by their partners and connected companies for free.
The Government is in fact asking them to put a price on the brand names and even pay GST on them.
Find out all about the GST on brand names right here!
Indian Government Wants Conglomerates To Pay GST On Brand Names
The indirect tax department is demanding Indian companies and foreign banks to pay an 18 per cent Goods and Services Tax (GST) on the names of brands and logos.
Apparently, the reason behind this is that there are subsidiaries and other companies related to the large conglomerates make use of the brand names and that too, for free.
The government also wants these companies to get their brand names and logos evaluated, and also make their subsidiaries and group companies to pay a fee for using the brand names and logos.
As per reports, some big names, such as Tata, Mahindra are being scrutinised along with the banks such as ICICI, Citi and HSBC too.
However, HSBC, Tata, and the other companies haven’t shared their responses about whether GST should be applied on brand names and logos.
Experts’ Opinion: Should GST Be Applied Or Not?
Experts are of the opinion that this GST of 18% will probably incur about thousands of crores in the form of taxation for these companies and banks. They also think that these conglomerates and banks will most likely have to determine the value of their brands and logos, which many of them haven’t done.
Ritesh Kanodia, partner, Dhruva Advisors, a tax advisory firm said, “Charging of GST could be an entirely revenue-neutral exercise as credit may be available to the recipient. But if not done, (this) could result in unnecessary litigation.”
As per the GST law, any transaction between related parties, which includes a company and its subsidiary or an Indian arm and its parent overseas, is liable even though there is no consideration. This has resulted in the indirect tax department asking for companies and banks to put a GST on the brands and logos.