Cummins chief calls taxing IP a big disincentive for R and D

The American diesel engine specialist, which is celebrating 100 years, has been operating in the country for the 50-plus years. As a group, it collectively operates 21 manufacturing facilities in the country employing over 10,000. “There are lots of complicated taxes in India. One such levy is the tax imposed on IP. We generate many IPs here in India and we use them in other markets as well. But we have to pay tax to government for this. 

“While other countries give us tax discounts if we generate IPs, but India taxes it. My feeling is that this really is a big disincentive to do R&D,” Cummins Inc Chairman and Chief Executive Tom Linebarger said. 

The Centre had imposed tax on transactions relating to intellectual property in the 1994 budget if the IP rights were classified as services and the states used to levy tax on IP rights if the transaction involving such were classified as sale/deemed sale of goods under state sales tax rules. Under the GST regime, IP is taxed if the transaction value or the price actually paid or payable for the said supply of goods/services at 12 per cent (6 per cent each CGST and SGST).