Writers compose books and give them to publishers in order to receive a royalty. Publishers publish them and acquire profit by selling those books. They pay an agreed percentage of profit or sales made to the writers as a reward or compensation for composing books. This reward or compensation is called Royalty. While the Income Tax Department charges tax on this under under “Profit and Gains of Business or Profession” or “Other Sources” head of Income, it likewise provides a deduction on a similar that can be claimed by the authors to save tax. This deduction is covered under 80QQB of the Income Tax Act,1961.
Amount Included in Royalty Income
a. Any Income earned by an author in order to practice their profession
b. Any Income earned as a lumpsum payment for assignment (or grant) of any of his interests in the copyright of any book based on literary, artistic, or scientific in nature or of royalty or copyright fees for author’s book
c. Any Income got as the advance payment of royalties/copyright charges (a sum which is non-refundable)
Amount of Deduction
Deduction available will be lower of the following:
a. Rs 3 lakhs
b. The amount of royalty income received
Conditions to Avail the Benefit of Section 80QQB
Given below are certain conditions to be satisfied for income earned in India and outside India:
I) Individuals claiming the deduction should be a resident in India however not customarily resident in India.
ii) Individual must be an author or a co-author of a book that falls under the category of literary, artistic, or scientific work.
iii) Individuals should file their income tax return to claim the deduction.
iv) If an Individual has not received a lump sum amount, 15% of the estimation of the books sold during the year (before allowing any expenses) should be ignored.
v) Individuals should acquire FORM 10CCD from the individual responsible for making the payment.
Books here do exclude Journals, guides, newspapers, textbooks for school students, pamphlets, diaries, and other publications of similar nature.
Requirement for Income Earned Outside India
An individual is permitted deduction on income earned outside India when the income is brought to India in foreign exchange within 6 months from the end of the year or within the period allotted by RBI or other competent authority for this reason. Individuals should acquire a certificate in FORM 10H.
For more information, visit the website of All India ITR