Section 80QQB- Royalty from books of Literacy, Artistic, Scientific nature
Eligible Assessee
This section is applicable to all resident individual
Eligible Amount of Deduction
- Eligible Royalty Received xxxx
- Maximum Rs: 3,00,000
Which is lower
Eligible Royalty Means
- Lump sum royalty i.e amount recorded as Royalty
- Not lump sum then up to 15% of the value of Books Sold.
Conditions to Avail a Deduction
- To avail section 80QQB deduction, the taxpayer must be an individual resident or resident but not ordinarily resident in India. However, the assessee may be an Indian citizen or a foreign citizen. The taxpayer must have authored or co-authored a book that falls under the category of literary, artistic or scientific work.
- Authors of books would not include brochures, commentaries, diaries, guides, journals, magazines, newspapers, pamphlets, textbooks for school and other similar publications.
- The taxpayer must file income tax return to claim the deduction and obtain Form 10CCD from the person/entity making the royalty payment. Form 10CCD need not be attached to the income tax return. However, it must be maintained along with the books of accounts maintained by the assessee and produced if requested by an Assessing Officer along with the tax-audit report.
- If the income of the author is not a lump sum payment, then 15% of the value of books sold in the year (before allowing any expenses) should be ignored. Additionally, if the income is earned outside India, the deduction is allowed on income when it is brought to India within 6 months from the end of the year or within the period defined by the Reserve Bank of India (RBI).
Form 10CCD Format
- Form 10CCD format must be obtained by the taxpayer for availing deduction under section
- 80QQB. Form 10CCD needs to be completed and signed by the person or entity making the royalty payment to the taxpayer. The following Form 10CCD format can be used for claiming deduction under this section
Section 80RRB: Royalty From Patents
Eligible Assessee
- This section is applicable to Resident Individual
- Only those individuals that hold an original patent are eligible to apply for deduction under Section 80RRB. If any individual does not hold the original patent, he/she cannot apply for this deduction.
- The patent against which the royalty has been received must be registered under the Patent Act, 1970. The said patent must have been registered on or after 1st April 2003.
Eligible Amount of Deduction
- Royalty received xxxx
- Maximum Rs: 3,00,000
Which is lower
Note
- Only original patent holders can claim the deduction under Section 80RRB.
- If the royalty payments are received from a foreign country, then the deduction can be claimed only with respect to the royalty payments received within 6 months of the completion of the financial year in which the income is earned
- It is important to produce documentary evidence of the royalty payments otherwise the claim could be rejected.
- This deduction is only available for resident individuals i.e. HUF or Non-residents cannot claim this deduction.
- The amount of royalty is usually settled between two parties as per a mutual agreement.
