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How to get a tax deduction for royalty fees on books

INCOME TAX, INCOME TAX RETURN, income tax book publishing, ITR, ITR FILING, income tax, FINANCIAL EXPRESS, BUSINESS NEWS,

By Poonam Gandhi

Income tax deduction under Section 80QQB is available to an author of certain books, being resident in India, who is receiving income by way of royalty or copyright fees. For claiming deduction under Section 80QQB, the individual assessee is mandatorily required to furnish a certificate in Form No. 10CCD. The certificate should be duly verified by the person responsible for making payment to the assessee.

Deduction under section 80QQB is available only to a resident author and is not available to a non-resident person. In case of royalty income received by an author of a certain type of books, the deduction is available under section 80QQB. However, such deduction is not available towards journals, newspapers, magazine, diaries, pamphlets, brochures etc.

Some of the essential terms
Following are some of the important terms which need to be understood first, before going into the provisions of section 80QQB

Author: The term author includes within its ambit joint author.

Books: The term 'books' shall not include the following: Commentaries, diaries, brochures, magazines, guides, journals, pamphlets, schools text books and any other publication of similar nature.

Lump sum: The term lump sum with regard to royalties or copyright fees includes a non-refundable advance payment received on account of such royalties or copyright fees.

Provisions of section 80QQB
Eligible income available as a deduction under section 80QQB

Any income earned by an author in the exercise of his profession.

Any income earned as a lump sum consideration for the assignment or grant of any of his interest in the copyright of any book being the work of artistic or literary or scientific nature or royalty or copyright in respect of author's book.

Any income received as non-refundable advance payment of royalties or copyright fees.

Conditions for availing deduction under section 80QQB

The individual assessee claiming deduction should be resident in India or the assessee should be resident but not ordinarily resident in India.

The individual assessee should have authored (which also includes co-author) a book covering the work of either literary or artistic or scientific nature.

The amount should be received in lump sum consideration. However, if the amount is not received in lump sum consideration, income (before allowing expenses) as is in excess of 15% of the value of books sold during the year should be ignored.

In case the income is earned outside India, the deduction under section 80QQB shall be available only on so much of income earned which is brought back in India, in convertible foreign exchange, within a period of six months (or within such extended time) from the end of the previous year in which the income is earned.

It should be noted here that in such case, the assessee is mandatorily required to furnish a certificate in Form No. 10H. the certificate is to be submitted at the time of filing of the return of income.
The assessee claiming the deduction is compulsorily required to furnish a certificate in Form No. 10CCD. Such a certificate in Form No. 10CCD should be duly verified by the person responsible for paying the income. The certificate is to be submitted at the time of filing of the return of income.

Once the deduction with respect to income has been claimed under section 80QQB, no further deduction can be claimed for such income under any other provisions of the Act in any assessment year.

The maximum amount of deduction allowed under section 80QQB is lower of the following-the total amount of royalty income; or Rs 3 lakh.

(The writer is a chartered accountant. Source: Tax Guru)