Under section 80QQB of the income tax act, authors can claim deduction on royalty income earned by them.
Deduction allowed is lower of –
Rs 3,00,000
OR
Gross Income (as calculated below)
Gross Income of the author includes any income derived by exercise of author’s profession, lump sum consideration for assignment (or grant) of any of her interests in the copyright of the book, or of royalty or copyright fees for author’s book. Includes advance payment on account of such royalties or copyright fees, which is not returnable.
Conditions to avail deduction under section 80QQB –
- Taxpayer is an individual resident or resident but not ordinarily resident in India (may be an Indian citizen or a foreign citizen)
- Taxpayer is an author or has co-authored.
- The book authored is work of literary, artistic or scientific nature. Books do not include, brochures, commentaries, diaries, guides, journals, magazines, newspapers, pamphlets, text books for school, tract and other similar publications.
- The taxpayer must seek a certificate in Form 10CCD from the person responsible for making the payment to the tax payer. This certificate must be kept safely by the author, should the assessing officer ask for it.
- Deduction can only be claimed by filing an income tax return.
- Where income of the author is not a lump sum payment, 15% of the value of books sold in the year (before allowing any expenses) shall be ignored
- If income is earned outside India, the deduction is allowed on income when it is brought to India within 6 months from the end of the year or within the period defined by RBI or other competent authority for this purpose. Taxpayer must also obtain a certificate in Form 10H.