Deduction of Royalty Income for Authors

An author of any book receives Royalty Income. Such Income can be claimed as deduction under the Income Tax Act, 1961. There is a separate section 80QQB for this deduction. Taxpayer can claim deduction only if the following conditions are satisfied-

  1. Taxpayer should be resident of India. He may be Indian citizen or foreign citizen.
  2. He may be an author or joint author of literary work.
  3. Taxpayer has authored a book which is work of literary, artistic or scientific nature.
  4. Books authored shall not be diary, brochure, journal, magazine, newspapers, text books, guides, pamphlets etc.
  5. Gross total Income of taxpayer shall include such Royalty Income.
  6. Taxpayer must obtain a Certificate in Form No. 10CCD from the payer of royalty.
  7. Deduction U/s. 80QQB can be claimed by taxpayer only by filing his Income-tax return.

Deduction amount:-

  1. Deduction if royalty is received in lumpsum- If royalty is received by taxpayer in lump sum, then amount of deduction shall be actual royalty received by the author.
  2. Deduction if royalty is not received in lumpsum- If royalty is not received by taxpayer in lump sum, then amount of deduction shall be Royalty Income received by the author or 15% of the value of the books sold whichever is less.

However, maximum amount of deduction under this section is Rs. 3,00,000/-.

Royalty received from abroad:-

If the Royalty is received from abroad; then such remittance should be received within 6 months from the end of Financial Year. This period can be extended by Reserve Bank of India (RBI) or any other authority. However, if remittance is received from abroad after 6 months period, taxpayer cannot claim the deduction.

E.g. :- Mr. Ranjit is an author of a book. The financial details are as follows-

Particulars Amount (in Rs.)
Lumpsum royalty income receivable from abroad 4,50,000
Royalty received within 6 months from end of financial year 4,20,000
Total value of books sold 30,00,000
Expenses spent to earn royalty 1,00,000

Find out how much deduction Mr. Ranjit can claim U/s. 80QQB?

Ans. :- Computation of deduction U/s. 80QQB-

Particulars Amount (in Rs.)
A. Royalty received within 6 months from end of financial year 4,20,000
B.    15% of value of books   (Rs. 30,00,000*15/100) 4,50,000
C.   Lower of A and B 4,20,000
D.   Less: Expenses  1,00,000
E.    Balance that can be claimed as deduction U/s. 80QQB :- 3,20,000
However this deduction cannot be more than Rs. 3,00,000/-
F.    Hence, Deduction claimed U/s. 80QQB :- 3,00,000
G.   Balance taxable income :- 20,000

Hence, amount of deduction U/s. 80QQB is Rs. 3,00,000/-. Balance amount of Rs. 20,000/- shall be taxable.

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Deduction of Royalty Income for Authors
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An author of any book receives Royalty Income. Such Income can be claimed as deduction under the Income Tax Act, 1961. There is a separate section 80QQB for this deduction.
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