GST on Reverse Charge basis on royalty paid to Govt for rights to use natural resources

By | August 22, 2017
(Last Updated On: August 22, 2017)

 

Question 30: Whether an amount in the form of royalty or any other form paid/payable to the Government for assigning the rights to use of natural resources is taxable under GST ?

Answer: The Government provides license to various companies including Public Sector Undertakings for
exploration of natural resources like oil, hydrocarbons, iron ore, manganese, etc. For having assigned the rights to use the natural resources, the licensee companies are required to pay consideration in the form of annual license fee, lease charges, royalty, etc to the Government. The activity of assignment of rights to use natural resources is treated as supply of services and the licensee is required to pay tax on the amount of consideration paid in the form of royalty or any other form under reverse charge mechanism.

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