Deduction of Royalty Income: Sections 80QQB and 80RRB

Authors and inventors may receive royalty income from books, copyrights, patents or licensing arrangements. Although royalty income is generally taxable, eligible resident individuals can claim a deduction of up to ₹3,00,000 under:

• Section 80QQB for eligible royalty or copyright income earned by authors; and
• Section 80RRB for eligible royalty income from patents.

These deductions continue under the Income-tax Act, 2025 with new section numbers and prescribed forms. However, the deductions are generally available only when the taxpayer chooses the old tax regime.

Quick comparison: Section 80QQB and Section 80RRB

Deduction for authors under Section 80QQB

Section 80QQB provides a deduction to a resident individual who earns eligible royalty or copyright income as an author.

Who can claim the deduction?

The deduction may be claimed by an individual who:

• Is resident in India for the relevant year;
• Is the author or joint author of an eligible book; and
• Has included the eligible royalty income in gross total income.

A company, partnership firm, LLP, trust, Hindu Undivided Family or non-resident individual cannot claim the deduction under Section 80QQB.

What type of income is eligible?

Eligible income may include:

1. A lump-sum amount received for assigning or granting an interest in the copyright of an eligible book; or
2. Royalty or copyright fees received for the book, whether received as a lump sum or periodically.

The book must be of a literary, artistic or scientific nature. The provision also recognises eligible joint authors.

Publications that are not eligible

The deduction is not available for royalty income from publications such as:

• Brochures
• Commentaries
• Diaries
• Guides
• Journals
• Magazines
• Newspapers
• Pamphlets
• School textbooks
• Tracts
• Other publications of a similar nature

Merely describing a payment as “author royalty” does not automatically make it eligible. The nature of the publication and payment must satisfy the statutory conditions.

Maximum deduction under Section 80QQB

The deduction is the lower of:

• Eligible royalty income included in gross total income
• ₹3,00,000

The limit is not available separately for each book or publisher. It is the overall maximum deduction available to the taxpayer for the relevant year.

Expenses directly attributable to earning the royalty should be considered while determining the eligible income included in gross total income.

Special restriction for running royalty

Where an author receives periodic royalty instead of a lump-sum amount in consideration of all rights in the book, an additional restriction applies.

For deduction purposes, the royalty before attributable expenses is restricted to 15% of the value of books sold during the year. Royalty exceeding this limit is ignored while calculating the Section 80QQB deduction.

Example of deduction under Section 80QQB

Deduction for patent royalty under Section 80RRB

Section 80RRB provides a deduction to a resident individual who earns royalty from an eligible patent.

Who is an eligible patentee?

The taxpayer must:

• Be an individual resident in India;
• Be the true and first inventor of the invention;
• Be recorded as the patentee in the patent register; and
• Hold a patent registered under the Patents Act, 1970 on or after 1 April 2003.

A joint inventor may qualify where the statutory registration conditions are satisfied.

A person who purchases or otherwise acquires patent rights does not qualify merely because that person receives royalty. The taxpayer must satisfy the requirement of being the true and first inventor and being recorded as the patentee.

What patent income is eligible?

Eligible royalty may include consideration received for:

• Transferring all or some rights in the patent
• Granting a license relating to the patent
• Providing information concerning the working or use of the patent
• Permitting the use of the patent
• Providing services connected with these activities

Income that does not qualify

The statutory definition generally excludes:

• Consideration taxable under the head capital gains
• Income from selling goods manufactured through a patented process or selling a patented article for commercial use

For example, income from licensing patented technology may qualify. Ordinary revenue from selling products manufactured using the patented technology does not automatically become eligible patent royalty.

Maximum deduction under Section 80RRB

The deduction is the lower of:

• Eligible patent royalty income included in gross total income
• ₹3,00,000.

Example of deduction under Section 80RRB

Royalty under a compulsory license

Where royalty is payable under a compulsory license granted under the Patents Act, the deduction cannot be calculated using an amount exceeding the royalty settled by the Controller of Patents.

Conditions for royalty received from outside India

Foreign royalty may qualify under Section 80QQB or Section 80RRB, but only to the extent that it is brought into India in convertible foreign exchange within:

• Six months from the end of the relevant previous year; or
• A longer period permitted by the competent authority.

For FY 2025-26, the normal six-month period ends on 30 September 2026.

The competent authority is generally the Reserve Bank of India or another authority authorised under the applicable foreign-exchange law.

If only part of the foreign royalty is brought into India within the permitted period, the deduction is generally restricted to the eligible amount received in India.

Certificates and prescribed forms

For FY 2025-26 and AY 2026-27

The Income-tax Act, 1961 and Income-tax Rules, 1962 apply for income earned during FY 2025-26.

Form 10CCD is prescribed under Rule 19AC. Form 10CCE is prescribed under Rule 19AD. Form 10H is prescribed under Rule 29A for qualifying foreign royalty receipts.

Where a prescribed form is required to be filed electronically, it should be furnished through the Income Tax e-Filing portal within the applicable time.

Documents that should be retained

• Royalty agreements
• Publisher or licensee statements
• Copyright assignment documents
• Patent registration documents
• Book-sales statements
• Expense records and invoices
• Bank statements
• Foreign inward remittance evidence
• Prescribed certificates
• Acknowledgements of forms filed on the Income Tax e-Filing portal

Mapping under the Income-tax Act, 2025

The Income-tax Act, 2025 renumbers the provisions but broadly continues the existing eligibility conditions and the ₹3,00,000 deduction limits.

Forms under the Income-tax Rules, 2026

For tax year 2026-27 onward, the Income-tax Rules, 2026 prescribe new form numbers for these deductions.

Availability under the old and new tax regimes

Sections 80QQB and 80RRB are deductions under Chapter VI-A of the Income-tax Act, 1961. They are not among the deductions permitted under the default new tax regime.

Therefore, for AY 2026-27:

• A taxpayer using the old tax regime may claim the deduction if all statutory conditions are satisfied.
• A taxpayer using the default new tax regime under Section 115BAC cannot claim the deduction.

A similar restriction continues under Section 202 of the Income-tax Act, 2025 because Sections 151 and 152 are not among the limited deductions permitted while computing income under the default regime.

Taxpayers should compare the final tax liability under both regimes before choosing the old regime solely for claiming the royalty deduction.

How to claim author or patent royalty deduction on myITreturn

The exact names and placement of screens may vary depending on the assessment year, applicable ITR form and selected filing route. The general process is explained below.

Step 1: Log in and select the taxpayer

Log in to myITreturn.com, select the relevant member and start or continue the income-tax return for the applicable year.

Step 2: Select the appropriate tax regime

Select the old tax regime where a deduction under Section 80QQB or Section 80RRB is to be claimed.

Compare the total tax liability under both regimes before making the final selection. Consider the applicable tax rates, exemptions, deductions and other income while comparing the two regimes.

Step 3: Report the royalty income

Enter the complete royalty income under the appropriate income head.

Depending on the facts, the income may be reported under:

• Profits and gains from business or profession; or
• Income from other sources.

Authors carrying on writing as a profession may commonly report the income as professional income. However, the correct income head and ITR form depend on the nature and regularity of the activity and the taxpayer’s other sources of income.

Step 4: Enter attributable expenses

Enter legitimate expenses incurred wholly and exclusively for earning the royalty, where allowable under the applicable income head.

Maintain invoices, agreements, payment records and other supporting evidence for the expenses claimed.

Step 5: Open the deductions section

Go to the Deductions or Chapter VI-A Deductions section and select:

• Section 80QQB for eligible author royalty income; or
• Section 80RRB for eligible patent royalty income.

Enter the eligible deduction after considering:

• The ₹3,00,000 overall ceiling;
• The eligible income actually included in gross total income;
• The 15% book-sales restriction, where applicable;
• The compulsory-licence restriction, where applicable;
• Expenses attributable to earning the income; and
• The foreign-remittance condition, where applicable.

Step 6: Verify the income and TDS details

Match the royalty income and tax deducted with:

• Form 26AS;
• Annual Information Statement;
• Taxpayer Information Summary;
• Royalty statements;
• Invoices and agreements;
• Bank statements; and
• Books of account, where maintained.

A TDS entry appearing in Form 26AS or AIS does not by itself establish eligibility for the deduction. All statutory conditions must be independently satisfied.

Step 7: Complete the prescribed certificate requirement

Obtain and furnish, where applicable:

• Form 10CCD for a claim under Section 80QQB;
• Form 10CCE for a claim under Section 80RRB; and
• Form 10H for qualifying foreign royalty.

Keep the form acknowledgements and supporting documents available in case the Income Tax Department seeks verification.

Step 8: Review and file the return on time

Review the income computation, deduction schedule, selected tax regime and tax payable before submitting the return.

File the return within the applicable due date and complete the e-verification process.

Common mistakes to avoid

1. Claiming the deduction under the new tax regime

The deductions are not available under the default new tax regime. Selecting the wrong regime may result in the deduction being removed from the computation.

2. Claiming ₹3,00,000 without sufficient eligible income

₹3,00,000 is only the maximum limit. If eligible royalty income is ₹1,80,000, the deduction cannot exceed ₹1,80,000.

3. Treating product sales as patent royalty

Sale proceeds from patented products or products manufactured through a patented process do not automatically qualify under Section 80RRB.

4. Claiming the author deduction for an ineligible publication

Royalty income from newspapers, magazines, guides, school textbooks and similar excluded publications does not qualify under Section 80QQB.

5. Ignoring the 15% restriction

Authors receiving running royalty must check the relationship between the royalty and the value of books sold during the year.

6. Not bringing foreign royalty into India on time

Foreign royalty retained outside India beyond the permitted period may not qualify, even if the income has otherwise been offered to tax in India.

7. Claiming the same deduction twice

The same royalty income cannot be claimed again under another provision or in another year merely because the payment or remittance occurred at a different time.

8. Filing without the prescribed certificate

Failure to obtain or furnish the applicable certificate may result in the deduction being questioned or denied.

Conclusion

Sections 80QQB and 80RRB provide targeted tax relief to resident authors and inventors by allowing a deduction of up to ₹3,00,000 from eligible royalty income.

The deduction is not automatic. Eligibility depends on the nature of the book or patent, the taxpayer’s residential status, the character of the royalty, the prescribed certificates, timely receipt of foreign royalty in India and filing of the return within the applicable due date.

For FY 2025-26 and AY 2026-27, taxpayers should continue using Sections 80QQB and 80RRB and the forms prescribed under the Income-tax Act, 1961.

From tax year 2026-27, the corresponding provisions are Sections 151 and 152 of the Income-tax Act, 2025, supported by Forms 36, 37 and 38 under the Income-tax Rules, 2026.

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