What is Royalty Income of Authors

Authors write books and give it to the publishers

Publishers publish them and earn profit on it

They give a certain share of profit or sales to authors as the compensation for writing books

This compensation is called Royalty Income of authors

 

Deduction upto Royalty Income of 300000 to certain authors who are Resident Individual under Section 80QQB

Section 80QQB

1.This deduction is available only to Individual who is Resident  

and is Author who publishes books of Literary, Artistic, Scientific Nature

 

2.Hence this deduction is not for

  1. Non Residents
  2. Assessee other than Individual (like HUF, Partnership, Companies)
  3. Author who publish magazines or newspapers
  4. Only Literary, Artistic, Scientific Nature books covered, textbooks not covered

 

Amount of Deduction

Royalty Income Earned

                  or

Rs 3,00,000

whichever is less

 

Example 1

Suppose an author of Novels earns Royalty Income of Rs 400000

He has no other Income

What is His,GTI,Deductions and NTI?

View Answer

Q2

Suppose an author of Novels earns Royalty Income of Rs 250000

He also has another business from where he earns 150000 

What is His,GTI,Deductions and NTI?

 

View Answer

 

Royalty not received in lump sum          

Sometimes royalty income is received in parts like % of sales        

In this case, Royalty Income >15% of Sales Price to be ignored

 

Q3

Suppose an author of Novels earns Royalty Income @ Rs 10 per Book Sold

Sales Price of Book=Rs 40

No of Books Sold=20000

What is His,GTI,Deductions and NTI?

View Answer

 

How to claim deduction

  • Author should obtain certificates from publisher (person paying royalty) in prescribed form (10 CCD)
  • In case of receipt from outside Countries, deduction will be available only on income which is brought into India within 6 months from end of previous year or within additional time as provided by competent authority (RBI)

For Example for FY 2014-15,

Previous year ends on 31 March 2015

Royalty income should be received in India by 6 months  i..e. by 30 September 2015) 

This time may be further extended by RBI

Note:-

 If deduction claimed here, then no deduction under any other section regarding the same income.

  1. Income Tax
  2. Deductions Under Chapter VIA
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CA Maninder Singh
CA Maninder Singh is a Chartered Accountant for the past 8 years. He provides GST Training in Delhi. Register now.