Some of the foreign banks, as well as the Indian conglomerates, are under the radar for permitting Indian entities/subsidiaries which use their brand name and logo for free. The department of indirect taxes wants such entities to place a valuation on their brand names and logos and levy fees accordingly. According to sources, the government intends to charge 18% GST for such entities.
The companies which are under the radar are banks such as Citi, HSBC, ICICI, along with conglomerates such as Tata and Mahindra groups. The department of taxes has dispatched written inquiry orders to a few companies and has issued preliminary notices to a few foreign banks. The Tata group and HSBC have refused to give their comments while the other companies are yet to respond to requests they have received.
Financial experts believe that foreign banks and companies are most likely to pay thousands of crores in the form of tax once the charges are imposed. However, the cost might be lesser in case the subsidiary company is a manufacturing unit.
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Also, foreign banks/conglomerates will need to evaluate the value of their logos/brands first since many would not have completed this exercise.
Tax experts are of the opinion that a transaction held between a company and a subsidiary firm or an Indian company with a parent firm which is located overseas will be liable to pay taxes even without consideration.
This has resulted in increasing the demand from the indirect tax department concerning the need to levy 18% GST on logos and brands that are held by a conglomerate or a holding company but utilised by group companies and subsidiaries without paying any fees.
For any clarifications/feedback on the topic, please contact the writer at bhavana.pn@cleartax.in
Bhavana is a Senior Content Writer handling the GST vertical. She is committed, professional, and has a flair for writing. When away from work, she enjoys watching movies and playing with her son. One thing she can’t resist is SHOPPING! Her favourite quote is: “Luck is what happens when preparation meets opportunity”.
