Need for Invention in the Taxation Regime of Patents

Abstract

The patent system was introduced with the motto of ensuring furtherance of science and technology for the benefit of
society. When compared with other Intellectual Property (IP), patent has a different dimension that is of technology transfer,
and the same has been playing a vital role in domestic and international trade and commerce. Every event of
commercialising patent attracts economic returns to the patentee as well as the country where it is registered, retained and
commercialised. Thus, merely having inventor friendly ecosystem without foreseeing to retain the registered patents in India
for commercialisation to the fullest extent will not favour the developmental goals of the nation. In this context, the paper
examines the Indian Taxation regime for the taxing events of patents, both under direct and indirect taxes, and their
conduciveness for the effective promotion of creation, retention and commercialisation of patents in India. This paper also
compares the taxation of patents in other jurisdictions with India and recommends a favourable tax regime for patents which
would incentivise innovation and consequent commercialisation leading to the advancement of the nation.