Deduction in Respect of Royalty Income of Authors under section 80QQB

Income Tax Deduction under section 80QQB can be claimed by the individual assessee who is author or joint author of the book, maximum deduction under section 80QQB is limited to Rs 3 lakhs.

Eligible assessee

Individual resident in India

Conditions

  1. The assessee should be author or joint author of the book.
  2. The GTI of the assessee should include income derived by him in exercise of his profession on account of any lump sum consideration of the assignment of grant’ of – any of his interests in the copyright of book, of royalties or copyright fees (whether receivable in lump sum or otherwise) in respect of such books. It is further prescribed that the royalty or copyright fees shall include non returnable advance payment on account of such fees.
  3. The books should be work of literary, artistic or scientific nature. No deduction shall be allowed in respect of income from brochures, commentaries, diaries, guides, journals, magazines, newspapers, pamphlets, tax books of schools, tracts and other publications of similar nature.
  4. The assessee submits a certificate in form No. 10CCD, from the person responsible for playing the eligible income, along with the return of income. Download the format of the Certificate 
  5. If the eligible income is earned outside India, the assessee has to furnish a certificate in Form No. 10H along with the return of income. Download the Format of the Certificate for Foreign Inward remittance

Deduction

The deduction shall be 100% of income or Rs.300000/-, whichever is less. However following points should be noted –

  • If the royalty or copyright fee (before allowing expenses attributable to such income) is more than 15% of the value of the books sold during the previous year, the excess royalty shall not qualify for deduction. However, this rule will not apply in relation to a lump sum consideration in lieu of all rights of the assessee in the books.
  • If the eligible income is earned outside India, the deduction shall be allowed on so much of the income earned in foreign exchange, which is brought to India within six months from end of the previous year or within the period extended by the RBI.
  • It appears that the limit of Rs. 300000/- is per assessee and not per book.

Additional point:

Where a deduction is claimed under this section, no deduction is respect of such income shall be allowed under any other provision of the Act.

Reference: Section 80QQB of the Income Tax Act.

Deduction in respect of royalty income, etc., of authors of certain books other than text-books.

80QQB. (1) Where, in the case of an individual resident in India, being an author, the gross total income includes any income, derived by him in the exercise of his profession, on account of any lump sum consideration for the assignment or grant of any of his interests in the copyright of any book being a work of literary, artistic or scientific nature, or of royalty or copyright fees (whether receivable in lump sum or otherwise) in respect of such book, there shall, in accordance with and subject to the provisions of this section, be allowed, in computing the total income of the assessee, a deduction from such income, computed in the manner specified in sub-section (2).

(2) The deduction under this section shall be equal to the whole of such income referred to in sub-section (1), or an amount of three lakh rupees, whichever is less :

Provided that where the income by way of such royalty or the copyright fee, is not a lump sum consideration in lieu of all rights of the assessee in the book, so much of the income, before allowing expenses attributable to such income, as is in excess of fifteen per cent of the value of such books sold during the previous year shall be ignored :

Provided further that in respect of any income earned from any source outside India, so much of the income shall be taken into account for the purpose of this section as is brought into India by, or on behalf of, the assessee in convertible foreign exchange within a period of six months from the end of the previous year in which such income is earned or within such further period as the competent authority may allow in this behalf.

(3) No deduction under this section shall be allowed unless the assessee furnishes a certificate in the prescribed form and in the prescribed manner, duly verified by any person responsible for making such payment to the assessee as referred to in sub-section (1), along with the return of income, setting forth such particulars as may be prescribed.

(4) No deduction under this section shall be allowed in respect of any income earned from any source outside India, unless the assessee furnishes a certificate, in the prescribed form from the prescribed authority, along with the return of income in the prescribed manner.

(5) Where a deduction for any previous year has been claimed and allowed in respect of any income referred to in this section, no deduction in respect of such income shall be allowed under any other provision of this Act in any assessment year.

Explanation.—For the purposes of this section,—

(a) “author” includes a joint author;

(b) “books” shall not include brochures, commentaries, diaries, guides, journals, magazines, newspapers, pamphlets, text-books for schools, tracts and other publications of similar nature, by whatever name called;

(c) “competent authority” means the Reserve Bank of India or such other authority as is authorised under any law for the time being in force for regulating payments and dealings in foreign exchange;

(d) “lump sum”, in regard to royalties or copyright fees, includes an advance payment on account of such royalties or copyright fees which is not returnable

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