Section 80QQB - Deduction on Royalty Earned by Authors

Robin is a writer and has recently published a book. His publishers did a good job with marketing and Robin found a foothold in the storytelling Industry. Within a matter of days, his books were selling like hotcakes.

He was delighted and overwhelmed by seeing the huge response to his creative work. His publishers earned huge profit from the sales and agreed to pay a percentage of the profits and sales to him. This reward was Robin’s royalty.

Robin will now have to pay tax based on this Income under the ‘Profit and Gains of Business and Profession’ or ‘Other Sources’ under the Income Tax Return filing.

But, the good news is that Robin can save money on this tax under Section 80QQB of income tax Act, 1961.

What is Section 80QQB?

Section 80QQB of the Income Tax Act refers to the Deduction on royalty for authors. Royalty income under this Section are:

• Income that an author earns from practising a profession
• Income received in a lump sum
• Copyright fees of the book
• Amount received in advance as payment for copyright fees or royalty

Important Points Under Section 80QQB

1. Eligibility

The royalties received from journals, guides, newspapers, textbooks, pamphlets or other publications are not eligible for deductions under Section 80QQB of the Income Tax Act.

You are eligible for the deduction under these following parameters:

• If you are an author residing in India

• The content in the book is original and a work of artistic, scientific and literary nature

• You should be filing an income Tax Return to claim the deduction under this section

• If you have not earned a lump sum amount, 15% of the value sale of books should be deducted as a benefit

• If you are the author, you should take a duly-filled FORM 10CCD from the person paying you. You don’t have to attach this with the income tax return, but you should keep it safe to produce it to the assessing officer.

2. Criteria for Income from Abroad

In order to be deemed eligible for a deduction, the royalty you receive as income from abroad should be transferred to India within 6 months from the end of the year or within the period allotted by the Reserve Bank of India (RBI) or other approved authority.

Amount of Deduction Under Section 80QQB

The amount of deduction available will be lower of the following:

1. Rs. 3 lakhs
2. Amount of royalty income received

Example 1

Since Robin’s book is doing well, he received Rs. 10 lakhs as royalty income from his publishers. He also earns from a part-time business with profits of Rs. 3 lakh annual income. Therefore, Robin’s net income is as follows:

Example 2

Robin earned Rs. 10 lakhs after the sales on his book from a publisher based in the USA and received his royalty after the specified period of time laid out by the Income Tax Act.

In this case, the calculation will be as follows:

Conclusion

If Robin has benefitted from the provision laid under Section 80QQB, this means that you can benefit from it too. Make sure to file your income tax on time and enjoy the benefits of tax deduction.