Royalty - Definition / Legal Terminology - Income Tax

Explanation 2 - For the purposes of clause (vi) of sub-sec (1) of section 9 of the Income tax Act 1961 - Royalty means- consideration (including any lump sum consideration but excluding any consideration which would be the income of the recipient chargeable under the head Capital gains ) for- (i) the transfer of all or any rights (including the granting of a licence) in respect of a patent, invention, model, design, secret formula or process or trade mark or similar property ; (ii) the imparting of any information concerning the working of, or the use of, a patent, invention, model, design, secret formula or process or trade mark or similar property ; (iii) the use of any patent, invention, model, design, secret formula or process or trade mark or similar property ; (iv) the imparting of any information concerning technical, industrial, commercial or scientific knowledge, experience or skill ; (iva) the use or right to use any industrial, commercial or scientific equipment but not including the amounts referred to in section 44BB; (v) the transfer of all or any rights (including the granting of a licence) in respect of any copyright, literary, artistic or scientific work including films or video tapes for use in connection with television or tapes for use in connection with radio broadcasting; or (vi) the rendering of any services in connection with the activities referred to in sub-clauses ( i ) to ( iv ), ( iva ) and ( v ). Explanation 5.- For the removal of doubts, it is hereby clarified that - the royalty includes and has always included consideration in respect of any right, property or information, whether or not- ( a ) the possession or control of such right, property or information is with the payer; ( b ) such right, property or information is used directly by the payer; ( c ) the location of such right, property or information is in India. Explanation (h) - For the purposes of section 115BBF of the Income tax Act 1961, royalty , in respect of a patent, means consideration (including any lump sum consideration but excluding any consideration which would be the income of the recipient chargeable under the head Capital gains or consideration for sale of product manufactured with the use of patented process or the patented article for commercial use) for the- (i) transfer of all or any rights (including the granting of a licence) in respect of a patent; or (ii) imparting of any information concerning the working of, or the use of, a patent; or (iii) use of any patent; or (iv) rendering of any services in connection with the activities referred to in sub-clauses (i) to (iii);