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What is Section 80- RRB
Updated on : Aug. 27, 2022 - 4 p.m. 17 min read.
Section 80RRB of the Income Tax Act is for those individuals whose source of income is royalty on their works of art, inventions, patents, etc. Deductions on income can also be claimed through this Act.
Eligibility criteria:
Deductions under Section 80RRB can be claimed only upon satisfaction of a few basic criteria.
● Indian Resident: The individual claiming a deduction should be an Indian resident.
● Patent Holder: Only patentees can claim this tax deduction. Individuals who do not hold the original patent are not eligible for tax benefits.
● Patent Registration: The patent in question should be registered under the Patent Act of 1970, either on or after April 1, 2003.
● The patent holders who are residents Individuals of India are eligible to claim a deduction on their royalty income from patents.
Deductions:
The amount of deduction under section 80RRB is
- Rs. 3 Lakh or
- Income earned from "royalty of patent",
- whichever is less.
Deductions under Sec 80RRB for Royalties received against a Patent:
As specified earlier, the income received from Royalties is eligible for deductions under Section 80RRB. Following are some crucial points to be noted regarding this deduction: –
(i) One can claim a deduction of up to Rs. 3.00 Lakhs against royalty payments. This amount is the maximum amount that can be claimed as a deduction. If the actual royalties received are less than Rs. 3 Lakhs, then only that much amount would be eligible for deduction.
(ii) In case the individual has another source of income, then only the amount received as royalty can be claimed as a deduction.
(iii) Only original patent holders can claim the deduction under Section 80RRB.
(iv) If the royalty payments are received from a foreign country, then the deduction can be claimed only with respect to the royalty payments received within 6 months of the completion of the financial year in which the income is earned.
(v) It is important to produce documentary evidence of the royalty payments otherwise the claim could be rejected.
(vi) This deduction is only available for resident individuals of HUF or Non-residents who cannot claim this deduction.
(vii) The amount of royalty is usually settled between two parties as per a mutual agreement.
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