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What is Royalty on Patent

Patent is a unique invention made by a person.

Person making invention is called patentee

This patentee sometimes offer his technology or invention to some business who manufacture goods .Business offer patentee some share of profit to patentee in return

This share of profit is called Royalty on patents.

 

Deduction upto Royalty Income on Patens of Rs 300000 to certain patentee who are Resident under Section 80QRRB

Section 80RRB

This deduction available only to

Individual

who is Resident

who is Patentee [Developed a Patent]

 

Hence this deduction is not for

  1. Non Residents
  2. Assessee other than Individual (like HUF, Partnership, Companies)

 

Amount of deduction

  Royalty income earned

               or

  Rs 3,00,000

Whichever is less

 Exception

Sometimes,in public interest Government grants compulsory license to use patent.

In this case,Controller of Patents of the Government Settles the amount of Royalty Payable

In this case,Deduction under this Section cant be more than amount settled

 

 

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 can be claimed under any other section.     

 

  1. Income Tax
  2. Deductions Under Chapter VIA
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About the Author

CA Maninder Singh's photo - Expert in Practical Accounts, Taxation and Efiling
CA Maninder Singh
CA Maninder Singh is a Chartered Accountant for the past 8 years. He provides courses for Practical Accounts, Taxation and Efiling at teachoo.com .
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