Deduction in respect of royalty income of authors - Section 80QQB - Income Tax - Ready Reckoner - Income Tax

Deduction in respect of royalty income of authors - Section 80QQB Deduction is available in respect of royalty or copyright income of authors. Assessee covered: The taxpayer should be an individual resident of India (non residents not covered). Conditions to be fulfilled: Deduction available to an author or joint author. Income should be received in consideration for authoring any book of literary, artistic or scientific nature. It does not include brochures, commentaries, guides, diaries, magazines, journals, newspaper, pamphlets, text-books for schools, tracts or other publication of similar nature. A certificate in form 10CCD is required .This certificate is to be verified from the person making payments to author. The income should be earned in exercise of his profession. Extent of Deduction: Deduction is available to the extent of ₹ 3 lacs or income received, whichever is less. Points to be noted: If royalty or copyright fee is not provided for complete transfer of rights of author In such case, deduction will be income, before allowing expenses attributable to such income, as in excess of 15 % of the value of books sold during the previous year. If the income is earned from outside India - Only that much amount which is brought in India in convertible foreign exchange within six months from the end of previous years or within extended time prescribed by RBI. Individual must have authored or co-authored a book that falls under the category of literary, artistic or scientific work. Books here doesn t include Journals, guides, newspapers, textbooks for school students, pamphlets, dairies and other publications of similar nature. Illustration for Clarity: Royalty fee received 90,000 (it is earned from abroad). Rate of royalty as % of value of books 18%. Expenditure for earning royalty 10,000. Amount remitted to India in convertible foreign exchange within six months 70,000. Solution: (a) Amount remitted to India in convertible foreign exchange within six months 70,000 (b) Lump sum consideration, if received NIL (c) Royalty not exceeding 15% 75,000 Income received Lower of (a), (b) or (c): 70,000 Less: Expenditure incurred: 10,000 Hence, amount deductible subject to a maximum of 3,00,000 which is 60,000.