Deductions U/s 80RRB – Patent & Royalty
Deduction u/s 80RRB of Income Tax Act is provided to taxpayers having income through royalty and patent. This deduction is aimed at motivating patenting in India.
Meaning of Patent and Royalty:
- A patent as known is a government license that gives the holder exclusive rights to a process, design or new invention for a designated period of time. This right is conferred in exchange of details of a particular invention or creation. A patent is an intellectual property and the patent holder can ensure that his/her rights are protected after an idea or product is developed.
- Royalty basically means the payment made to an owner for the use of property, especially patents, copyrights works, franchise etc.
Claiming deduction U/s 80RRB of Income Tax Act:
In order to claim deduction u/s 80 RRB of Income Tax Act one must obtain certificates from the person paying royalty in prescribed form 10(CCD).
Limit for Deduction
- Royalty income earned or Rs 3,00,000 whichever is less.
- Individuals who earn royalty from foreign sources can claim deductions only within 6 months from the end of the last year in which the income was received.
Eligibility criterion for Section 80RRB deduction:
- The individual claiming a deduction should be an Indian resident.
- Only patentees can claim this tax deduction. Individuals who do not hold the original patent are not eligible for tax benefits.
- The patent under Section 80RRB of Income Tax Act should be registered under the Patent Act of 1970, either on or after April 1, 2003.