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royalty income u/s 80qqb

Royalty Income – Deductions u/s 80QQB

Last Update Date : August 12, 2018

deductions under section 80QQB

As the saying goes “ A writer is someone for whom writing is more difficult than other people”. Writing is an art. They always inspire us by their books, articles, quotes and many more. These days there are so many platforms for writers/authors to showcase their talent. They practice, pen them and publish books through many mediums like media firms, major publishers, technology etc. and get rewarded financially. The type of reward earned through sales or profit is called Royalty Income of authors. This guide covers the tax deductions available under section 80QQB.

What is Royalty Income

The professional income earned by authors is by publishing their books. The publishers publish their books and a certain amount of sales or profit is paid to the authors as compensation for the work. This income is called Royalty Income.  The Income Tax Department (ITD) charges tax on Royalty income as well. But there are deductions, that can be claimed by the author to save tax. These deductions are covered under section 80QQB of Income Tax Act, 1961.

What is Included in Gross Total Income?

  • For an individual resident of India, Gross total income includes the following;
  • Any Income derived by an author for practicing his profession.
  • Any amount of consideration obtained by the author for the assignments/grants on writing books of his interests in respect to the copyrights of any book based on literary, artistic or scientific in nature, or royalty or any copyright fees.
  • Any income received as advance payment of royalties/copyright fees. (amount which is non-refundable)

Deductions Allowed u/s 80QQB

  1. The amount of deduction can be up to Rs. 3,00,000/-
  2. Or, the Gross total income earned by him,
  3. Or (b) Whichever is less.

Claiming Deductions

Conditions

  • Royalty income can be claimed as deduction, provided that,
  • The individual taxpayer should be a resident of India.
  • Taxpayer must be an author. Author here also refers to Joint authors.
  • Authors must publish books with respect to the topics based on literary, artistic or scientific in nature.
  • Books here doesn’t include Journals, guides, newspapers, textbooks for school students, pamphlets, dairies and other publications of similar nature.
  • Royalty income is included in the gross total income of a taxpayer.
  • Deductions are claimed mainly at the time of filing income tax returns.
    In case of a a lump sum amount received by the author, 15% of the value of the books sold in a year can be deducted.

How to Claim Deduction?

  • Form 10CCD is the certificate of payment of royalty, that must be obtained by the taxpayer.
  • For a taxpayer who had earned income outside India, in such cases deduction can be claimed only when the amount is bought to India within 6 months or within the period allotted by the RBI or other competent authority. Such taxpayers much obtain a certificate of Form 10H.

Important Notes:

  • Once the deductions are claimed under section 80QQB, then no deductions under any other sections for the same income can be claimed .
  • There is no deduction claimed for the income earned in the previous year that has been claimed and allowed in respect to income referred under this section.

Example:
Mr. Ravi is very passionate about writing. He is a resident of India and a recognised author who publishes books based on scientific facts. He earns Rs. 2,25,000 as his royalty income and he has a business where his profits are Rs. 5,00,000 p.a. Calculate his net income.

Particulars Amounts
Income from Profits and Gains of Business Profession (PGBP)

(5,00,000+ 2,25,000)

7,25,000/-
Gross total income 7,25,000/-
Less deductions:
Sec 80QQB (2,25,000/-)
Net Income 5,00,000/-

To know how to utilize the tax saving options available to you and for better tax saving and planning options, consult your personal tax expert at H&R Block India.

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