Deduction u/s 80QQB - Deduction in respect of royalty income of authors - Exemptions and Deductions - Income Tax

SECTION 80QQB

• Deduction is available in respect of royalty or copyright income of authors.
• Assessee covered: The taxpayer should be an individual resident of India (non – residents not covered).
• Conditions to be fulfilled:
  • Deduction available to an author or joint author.
  • Income should be received in consideration for authoring any book of literary, artistic or scientific nature.  It does not include brochures, commentaries, guides, diaries, magazines, journals, newspaper, pamphlets, text-books for schools, tracts or other publication of similar nature.
  • A certificate in form 10CCD is required .This certificate is to be verified from the person making payments to author.
  • The income should be earned in exercise of his profession.
• Extent of Deduction: Deduction is available to the extent of ₹ 3 lacs or income received, whichever is less.
• Points to be noted:
  • If royalty or copyright fee is not provided for complete transfer of rights of author – In such case, deduction will be “income, before allowing expenses attributable to such income, as in excess of 15 % of the value of books sold during the previous year.”
  • If the income is earned from outside India - Only that much amount which is brought in India in convertible foreign exchange within six months from the end of previous years or within extended time prescribed by RBI.

Illustration for Clarity:

Royalty fee received – 90,000 (it is earned from abroad).

Rate of royalty as % of value of books – 18%.

Expenditure for earning royalty – 10,000.

Amount remitted to India in convertible foreign exchange within six months – 70,000.

Solution:

(a) Amount remitted to India in convertible foreign exchange within six months – 70,000

(b) Lump sum consideration, if received – NIL

(c) Royalty not exceeding 15% – 75,000

Income received – Lower of (a), (b) or (c): 70,000

Less: Expenditure incurred: 10,000

Hence, amount deductible subject to a maximum of 3,00,000 which is 60,000.

1. Form No. 10CCD - Certificate under sub-section (3) of section 80QQB for authors of certain books in receipt of royalty income etc.

2. Section - 80QQB - Deduction in respect of royalty income, etc., of authors of certain books other than text-books

3. Can a Non-Resident claim deduction u/s 80QQB for royalty income ?