Introduction-
Deduction under section 80QQB in respect of royalty income earned by an author for writing books. This deduction is available for an individual “Resident in India”. An author writes books and gives to the publishers. Publishers publish them and earn profit on selling those. They pay an agreed amount of percentage of profit on sales made to the authors. This reward is called Royalty Income. Royalty income is taxable under the Income Tax Act, so the deduction u/s 80QQB is allowed as deduction.
Meaning of Royalty-
- 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).
Amount of Deduction-
Deduction if royalty is received in lump sum- If royalty is received by taxpayer in lump sum, then amount of deduction shall be actual royalty received by the author.
Deduction if royalty is not received in lump sum- If royalty is not received by taxpayer in lump sum, then amount of deduction shall be Royalty Income received by the author or 15% of the value of the books sold whichever is less.
However, maximum amount of deduction under this section is Rs. 3,00,000/-.
Conditions to avail this deduction-
- The Individual should be “Resident in 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 but does not includes Journals, guides, newspapers, textbooks for school students, pamphlets, dairies and other publications of similar nature.
- Individual must file his Income tax return to claim the above deduction.
- Taxpayer must obtain a Certificate in Form No. 10CCD from the payer of royalty.
Royalty received from abroad:-
- If the Royalty is received from abroad- then such remittance should be received within 6 months from the end of Financial Year. This period can be extended by Reserve Bank of India (RBI) or any other authority. However, if remittance is received from abroad after 6 months period, taxpayer cannot claim the deduction.
Example 1-
Mr. X is an author of book. He is Resident in Indian, has received Rs. 5,00,000 as Royalty within India. What will be the deduction amount under section 80QQB?
Answer-
Actual Amount Received Rs. 5,00,000 or Rs. 3,00,000 whichever is lower. So, the deduction under section 80QQB is allowed to Rs. 3,00,000.
Example 2-
Mr. X is an author of book. He is Resident in India, has earned Rs. 5,00,000 as Royalty from USA publisher on 25.05.2018. He has received the foreign remittance on 28.01.2019. What will be the deduction amount under section 80QQB?
Answer-
In case of foreign remittance, he has not received any amount within 6 months.
So, he is not eligible for deduction under section 80QQB.