Deductions U/s 80RRB – Patent & Royalty


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.