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Section 80QQB of income tax act 1961, states provisions related to Royalty or copyright Income. This section includes deductions for royalty income of authors. The income from the royalty is taxed under profit and gains of business or profession or other sources. But the deduction provided to the authors for saving their tax is stated under section 80QQB.
When authors write books and give it to the publisher to publish them, the publishers earn profits by selling the books. The publishers then pay an agreed amount of their profits or sales to the authors as their compensation for writing content for the books. This compensation is called Royalty.
The amounts that are included the royalty income are:
The benefit under this section will be available to the authors. The lower of the following will be deducted as income tax deduction:
Rs 3 Lakh
or
The actual amount received as royalty
Authors of India who are earning royalty or copyright income are eligible to claim deduction under section 80QQB. There are certain conditions that must be satisfied to be eligible for this tax deduction. They are:
Income earned in India:
Books here do not include journals, newspapers,diaries, or textbooks for school students.
For Example:
Mr X is a resident of India and is a recognized author who writes books of artistic nature. He gets Rs 5,00,000 as royalty income. He has a business from where he earns profits of Rs 3,00,000 per annum. Below is the working of his net income under the income tax act 1961:
Income from profits and gains of business | 8,00,000(5,00,000 + 3,00,000) |
Gross Income | 8,00,000 |
Less- Deductions under section 80QQB (Royalty income or 3 lakh whichever is less) | 3,00,000 |
Net Income | 5,00,000( 8,00,000-3,00,000) |
Income earned outside India
For Example:
Mr. Y is an author and writes books of scientific nature as he is a scientist. He wrote a book for a publisher based in the UK and earned Rs. 5,00,000 as royalty on 20th April 2022 but received the remittance after six months i.e on 31st oct 2022.
Working of his net income will be as follows:
Income from profits and gains of business | 5,00,000 |
Gross Income | 5,00,000 |
Less- Deductions under section 80QQB | NIL |
Net Income | 5,00,000 |
Since Mr. Y has received remittance from foreign publisher after six months, he will not be getting the benefit of any deduction under Section 80QQB.
The FORM 10CCD is a type of certificate that is to be obtained by the taxpayer i.e. author from the person or publisher making payment to him or her. This is a compulsory document to avail deductions under section 80QQB. This form needs to be completed and signed by the individual or entity who is making the payment of the royalty to the taxpayer.
The format of the FORM 10CCD is
For the authors who get income in form of royalty or copyright income are benefited with the deduction under Section 80QQB. If the individual is resident or resident but not ordinarily resident of India he or she is eligible for the deduction of Rs. 3 lakh or the royalty income whichever is less.
The authors get the deductions for the income earned in the form of royalty by them for writing books.
Any payment received as compensation for writing books or copyright income for the publication is called Royalty.
The deduction that is available under section 80QQB is Rs. 3 Lakh or the royalty amount received, whichever is less.
Yes, the income from royalty is taxable under the head Income from business and profession or other sources.
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