India: India's Goods And Services Tax And Its Impact On Trademark Rights

Last Updated: 26 July 2017
Article by Vikrant Rana and Aakriti Thakur

One Nation-One Tax: What is GST?

At midnight on June 30, 2017, India was ushered into a new regime of indirect taxation: the GST, or Goods and Services Tax. It is touted as the biggest fiscal reform the country has ever witnessed since Independence, and it has been claimed that it will lead to decreased inflation, rise in GDP, and more transparent accountability of parties. The immediate and noticeable effect is, of course, change in prices. By introducing GST, the government has subsumed Central and State taxes, such as VAT, service tax and Excise Duties, into a unified tax regime applicable across the board in all states and territories. Under the GST, there are now four slabs of applicable tax: a low rate of 5%, standard rate of 12 or 18%, and a high rate of 28%. There are about 1200 goods and 600 services on which GST is applicable, and while there are many items on which the tax is now reduced, thanks to GST, thereby decreasing their final market price, some items have become costlier. The government has claimed that all essential commodities have been exempted from tax under GST, or been left out of the ambit of applicability for GST altogether. The aim is to ultimately reduce the burden laid upon the consumers by the earlier tax infrastructure which resulted in a "cascading tax" effect. The "cascading tax" effect is in essence the principle of the end-consumer having to bear the load of all the taxes paid by dealers, wholesalers, retailers, stockists etc. as middle-men between the source of the goods to their final point of sale.1

As it turns out, the implementation of GST may have a profound impact on the Indian intellectual property regime, primarily on trademark rights.

Provisions affecting trademark rights

The GST rate lists for goods and services provide different rates of tax for the branded and unbranded versions of a number of products, essentially common foodstuffs, such as cereals, pulses, paneer and natural honey. These goods, if sold loose, i.e., unbranded and without being packaged in unit containers, will be exempt from GST. However, the moment they are packaged and bear a registered brand name, they will attract GST of 5%.

Notifications 1/2017 and 2/2017 issued by the Central Board for Excise and Customs2 define a brand name as follows:

The phrase "registered brand name" means brand name or trade name, that is to say, a name or a mark, such as symbol, monogram, label, signature or invented word or writing which is used in relation to such specified goods for the purpose of indicating, or so as to indicate a connection in the course of trade between such specified goods and some person using such name or mark with or without any indication of the identity of that person, and which is registered under the Trade Marks Act, 1999.

The Press Information Bureau further issued a clarificatory notification on July 53 after confusion arose regarding the meaning of "registered brand name" in the GST rate list for goods stating that:

"...unless the brand name or trade name is actually on the Register of Trade Marks and is in force under the Trade Marks Act, 1999, CGST rate of 5% will not be applicable on the supply of such goods."

While the tax rate of 5% may seem nominal, it is relevant to consider that earlier, food grains, whether packaged or not were exempt from taxes altogether in most States, even though they were allowed to be charged at a rate of 4%. Understandably, this new and compulsory tax imposition has resulted in an outcry among traders in food grains and pulses, staples in any person's diet.

Impact of GST on Trademark Law

As reported in Livemint4 on July 7, KRBL Ltd. which owns India's largest rice brand, 'India Gate', is crowing all the way to the bank as its rice now comes exempt from GST, for the simple reason that it has not been able to get its trademark registered with the Indian Trademarks Registry under the relevant class, i.e., Class 30 due to oppositions filed against its marks by third parties.

In fact, in about the few days since GST came into effect, there are already reports of small, local traders resorting to various innovative means to avoid higher rates of taxation on their products.5 Rice traders have appealed to the Finance Minister to find a solution to their problem, of increased prices, as well as those who are unfair beneficiaries in a competitive marketplace of what appears to be a significant loophole.6

The Government has also begun to take note of the problems arising in implementation of the new tax regime and its long-term implications, especially in the area of essential commodities such as foodstuffs and pharmaceuticals.7 Trademark owners are approaching the Trademark Registry to withdraw their trademarks, or considering inventive ways to keep their marks from attaining registration.8 If trademark owners would rather surrender trademark protection than pay taxes for them, it could strike a crucial blow to the intellectual property regime in the country.

GST, Trademarks and the Economy: An Impact Analysis

Intellectual Property plays an important part in the growth of any economy and India is well aware of its importance as one of the premier emerging economies in the world. Any fiscal plan that hits intellectual property rights, especially in a deterrent fashion, is likely to impact economic growth and development negatively in the long run.

A trademark, by its very definition, is an indication of source and a guarantee of quality of goods or services. A fiscal regime that deters traders from using or registering trademarks, simply to avoid tax liability, sets a dangerous precedent. With GST consolidating the national market, the role of trademarks as such becomes even more important. If trademark rights are not enforced properly, it will result in widespread counterfeiting and infringement, indicating an influx of goods of compromised quality. If this is allowed to happen, the reputation and goodwill of established brands will inevitably be diluted and the resultant consumer confusion will diminish the reputation of the market as a whole. This is likely to discourage investment and new start-up enterprises which will negatively impact market indices and thereby, national economic growth.

GST is likely to impact other forms of intellectual property as well. Temporary or permanent transfer or permitting the use or enjoyment of Intellectual Property (IP) right in respect of goods other than Information Technology software (eg. Media streaming services) is being taxed at 12%, while software services, falling under the residual category of services, is liable for 18% tax.9 Thus, computer software and associated services, at least, are likely to see an increase in prices.

The new GST tax regime is expected to unify the country's market, introduce greater transparency, encourage export and investment and reduce inflation. While it is no doubt a revolutionary step to take, unless its implementational drawbacks are dealt with quickly and effectively, its intended boost to the Indian economy might end up backfiring.


1 See, accessed on July 12, 2017. See also Rate of GST on Goods, Rate of GST on Services, Notifications 1/2017 and 2/2017, dated June 28, 2017, all available at See, accessed on July 12, 2017. See also Rate of GST on Goods, Rate of GST on Services, Notifications 1/2017 and 2/2017, dated June 28, 2017, all available at

2 See Notifications 1/2017 and 2/2017, dated June 28, 2017, both available at

8 Supra, 5.

9 See Rate of GST on Services, supra 1.

Additional References:

The Constitution 101st Amendment Act, 2017.

Tobacco Products (Prohibition of Advertisement and Regulation of Trade and Commerce Production, Supply and Distribution) Act, 2003

Cigarettes and Other Tobacco Products Rules, 2008

Cigarettes and Other Tobacco Products (Packaging and Labelling) Amendment Rules, 2014

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Vikrant Rana
In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.