9911796707
TMI BlogIncentivize and support authors by providing a tax deduction on royalty and copyright income : Clause 151 of the Income Tax Bill, 2025 Vs. Section 80QQA of the Income-tax Act, 1961X X X X Extracts X X X X X X X X Extracts X X X X ..... inst the backdrop of the existing Section 80QQA of the Income-tax Act, 1961, which provides for a deduction in respect of professional income of authors, but with a focus on textbooks in Indian languages. The introduction of Clause 151 reflects a significant shift in legislative approach, both in terms of the scope of eligible works and the structure of the deduction. This commentary provides a comprehensive analysis of Clause 151, elucidates its objectives and implications, and undertakes a detailed comparative analysis with Section 80QQA, highlighting the evolution of legislative policy towards the taxation of authors' royalty income. Objective and Purpose The legislative intent behind Clause 151 is to incentivize and support author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eral public or specialized audiences outside the formal education sector. The eligible income must arise from professional activity, ensuring that only genuine authorial income is covered. 2. Quantum of Deduction (Sub-section 2) The deduction permitted is the lesser of: * (a) The whole amount of such income (i.e., 100% deduction); * (b) Three lakh rupees. This cap introduces a clear, fixed monetary limit, replacing the percentage-based approach of Section 80QQA. This change simplifies the calculation, provides certainty, and potentially broadens the benefit to mid-level authors, while limiting the benefit for high-earning authors. 3. Limitation on Royalty-based Income (Sub-section 3) Where the income is not a lump sum for all right ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the same income is permitted under any other provision of the Act. This anti-double-deduction provision prevents abuse and ensures the integrity of the tax base. 7. Definitions (Sub-section 8) Key terms are defined as follows: * "Author" includes joint authors, expanding eligibility. * "Books" excludes brochures, commentaries, diaries, guides, journals, magazines, newspapers, pamphlets, textbooks for schools, tracts, and similar publications, by whatever name called. This exclusion is significant and narrows the scope to works intended as standalone literary, artistic, or scientific contributions. * "Competent authority" is the Reserve Bank of India or any other authority authorized to regulate foreign exchange. * "Lump sum" in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imited to text-books in Indian languages, dictionaries, thesauruses, encyclopaedias, or books prescribed/recommended by universities for degree/post-graduate courses. - Clause 151: Covers books of literary, artistic, or scientific nature, excluding text-books and certain other publications. Analysis: - Clause 151 is broader in terms of genre (literary, artistic, scientific) but narrower in that it excludes text-books, which were the primary focus of Section 80QQA. - The policy shift is from supporting educational/academic works to supporting general creative output. 2. Language Requirements - Section 80QQA: Book must be in a language specified in the Eighth Schedule to the Constitution or as notified by the Central Government. - Clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is modernized to reflect the global nature of authorship and publishing. 7. Definition of "Book" - Section 80QQA: Not explicitly defined, but contextually refers to text-books and certain academic works. - Clause 151: Explicitly excludes brochures, commentaries, diaries, guides, journals, magazines, newspapers, pamphlets, school text-books, and similar publications. Analysis: - Clause 151 provides clarity and mitigates interpretational disputes. 8. Anti-duplication and Abuse Prevention - Section 80QQA: No explicit anti-duplication clause. - Clause 151: Explicitly bars double deduction and limits royalty income to 15% of sales for non-lump sum arrangements. Analysis: - Clause 151 is more robust in preventing tax avoidance. Comparati ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
