Income Tax Ordinance, 2001 has defined the meaning of royalty paid by companies for use of rights.
The Income Tax Ordinance, 2001 up dated up to June 30, 2020 issued by the Federal Board of Revenue (FBR), defined the meaning of ‘royalty’ as any amount paid or payable, however described or computed, whether periodical or a lump sum, as consideration for —
(a) the use of, or right to use any patent, invention, design or model, secret formula or process, trademark or other like property or right;
(b) the use of, or right to use any copyright of a literary, artistic or scientific work, including films or video tapes for use in connection with television or tapes in connection with radio broadcasting, but shall not include consideration for the sale, distribution or exhibition of cinematograph films;
(c) the receipt of, or right to receive, any visual images or sounds, or both, transmitted by satellite, cable, optic fibre or similar technology in connection with television, radio or internet broadcasting;
(d) the supply of any technical, industrial, commercial or scientific knowledge, experience or skill;
(e) the use of or right to use any industrial, commercial or scientific equipment;
(f) the supply of any assistance that is ancillary and subsidiary to, and is furnished as a means of enabling the application or enjoyment of, any such property or right as mentioned in sub-clauses (a) through (e); and
(g) the disposal of any property or right referred to in sub-clauses (a) through (e).
