{"id":3845,"date":"2021-04-03T06:44:01","date_gmt":"2021-04-03T06:44:01","guid":{"rendered":"https:\/\/swaritadvisors.com\/blog\/?p=3845"},"modified":"2021-04-03T06:44:04","modified_gmt":"2021-04-03T06:44:04","slug":"section-80rrb-deduction-for-patent-royalty","status":"publish","type":"post","link":"https:\/\/swaritadvisors.com\/blog\/section-80rrb-deduction-for-patent-royalty\/","title":{"rendered":"A Comprehensive Analysis on Section 80RRB Deduction for Patent Royalty"},"content":{"rendered":"\n<p class=\"has-drop-cap\">Section\n80RRB was announced to make sure that someone who has done extraordinary work\ngets their reward. This facility is provided in the Income Tax Act for\ntaxpayers attaining an income through patent royalty. The royalty received by a\nperson on the Patent is suitable for tax deduction under Section 80RRB of the\nIncome Tax Act. Hence, Section 80RRB deduction for Patent Royalty is directed\nto inspiring innovation and patenting in India. Scroll down to check more\ninformation regarding Section 80RRB deduction for Patent Royalty.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a3a6a7060bcf\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a3a6a7060bcf\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/swaritadvisors.com\/blog\/section-80rrb-deduction-for-patent-royalty\/#What_is_a_Patent\" title=\"What\nis a Patent?\">What\nis a Patent?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/swaritadvisors.com\/blog\/section-80rrb-deduction-for-patent-royalty\/#What_is_Section_80RRB\" title=\"What\nis Section 80RRB?\">What\nis Section 80RRB?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/swaritadvisors.com\/blog\/section-80rrb-deduction-for-patent-royalty\/#What_is_the_Eligibility_Criteria_for_Section_80RRB_Deduction_for_Patent_Royalty\" title=\"What\nis the Eligibility Criteria for Section 80RRB Deduction for Patent Royalty?\">What\nis the Eligibility Criteria for Section 80RRB Deduction for Patent Royalty?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/swaritadvisors.com\/blog\/section-80rrb-deduction-for-patent-royalty\/#Deductions_under_Section_80RRB_for_Royalties_against_a_Patent\" title=\"Deductions\nunder Section 80RRB for Royalties against a Patent\">Deductions\nunder Section 80RRB for Royalties against a Patent<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/swaritadvisors.com\/blog\/section-80rrb-deduction-for-patent-royalty\/#Conclusion\" title=\"Conclusion\">Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_a_Patent\"><\/span><strong>What\nis a Patent?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Indians are considered the innovative and creative minds in the globe. Therefore, it&#8217;s not exceptional to come across innovation or creations regularly. Such innovators don&#8217;t just make life relaxed for citizens of India but also for the globe as a whole. The innovators apply for <a href=\"https:\/\/swaritadvisors.com\/patent-registration\" class=\"text-primary\"><strong>Patent Registration<\/strong><\/a> with the relevant authorities, which advises them to use the innovation for a particular time. A Patent is also recognized as an Intellectual Property Right (IPR) and makes sure that the innovator&#8217;s rights are safeguarded. This permits the innovators to monetize their innovation and make regular incomes from the same. <\/p>\n\n\n\n<p>When an\ninnovator gives another individual or company the rights to use the Patent\nregistered innovation, in return, they receive a regular payment, and such\npayment is called Royal Payment. Generally, what happens is that the innovators\ndon&#8217;t have the means to advance their idea into an operative offering. In such\na case, a company or an individual takes the rights to use that innovation and\nthen improves it into an effective product. In such a condition, that company\nwill pay the innovator a royalty amount against using the invention commercially.\nIt may be a fixed amount every year or a certain percentage of sales for a\nspecified time.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_Section_80RRB\"><\/span><strong>What\nis Section 80RRB?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>As\nIndia&#8217;s official citizen, you have an exclusive right to pursue any lawful\noccupation to generate income. There are different paths from which you can\nmake money, comprising employment or business. Such income source for many\ncitizens of India is Royalty Payments. Royalty is an amount paid to an\nindividual by a different party against the usage of assured work created by\nthe recipient. This could contain art, inventions, music, painting, drawings,\netc. Royalty payments are generally frequent and can range from a particular\nperiod until the death of the recipient. If you also come under this category\nand receive royalty payments against your work, you can claim Section 80RRB\ndeduction for Patent Royalty under the Income Tax Act, 1961.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_the_Eligibility_Criteria_for_Section_80RRB_Deduction_for_Patent_Royalty\"><\/span><strong>What\nis the Eligibility Criteria for Section 80RRB Deduction for Patent Royalty?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Section\n80RRB deduction for Patent royalty can be claimed only by fulfilling all the\nfollowing criteria:<\/p>\n\n\n\n<ol><li>The taxpayer must be an individual. Corporates\nand Non-Profit Organizations are not entitled to claim any deduction under\nSection 80RRB.<\/li><li>An individual claiming a deduction must be an\nIndian resident.<\/li><li>The Patent under this section in question must\nbe registered under the Patent Act of 1970, either on or after April 01, 2003.<\/li><li>The individual should be an Indian citizen to\nclaim a deduction under this section.<\/li><li>Only the owner of a Patent can claim the\ndeduction under this section. Individuals who don\u2019t hold the actual Patent are\nnot eligible for tax benefits.<\/li><li>The Patent\u2019s co-owner is eligible to claim a\ndeduction, but the deduction concerning a specific Patent can be claimed only\nonce.<\/li><li>The taxpayer\u2019s name who is claiming the deduction\nmust be entered in the register of Patent as the Patentee.<\/li><li>Capital gains tax cannot be used to claim the\ndeduction by a transaction that attracts the same.<\/li><li>The deduction will be settled under this section\nonly if the assessee furnishes in the electronic mode Form No. 10CCE.<\/li><li>The\nassessee might make a product sale that was manufactured by using the patented\nprocesses. Otherwise, the assessee may sell the product which was patented.\nSuch examples cannot be used to claim deduction under Section 80RRB.<\/li><li>To claim a deduction under Section 80RRB, the\nassessee must mention the deduction amount in the income return.<\/li><\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Deductions_under_Section_80RRB_for_Royalties_against_a_Patent\"><\/span><strong>Deductions\nunder Section 80RRB for Royalties against a Patent<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>As\nstated previous, the income received from Royalties is suitable for Section\n80RRB deduction for Patent Royalty. Following are vital factors that should be\nnoted regarding this deduction:<\/p>\n\n\n\n<ol><li>A person can claim deduction under this section of up to Rs. 3 lakhs against royalty payments. It\u2019s the maximum amount that can be claimed as a deduction under this section. If the authentic royalties received are less than INR 3 lakhs, then only this amount would be suitable for deduction under this section;<\/li><li>If an individual has an alternate source of income, then the amount received as royalty can be claimed;<\/li><li>Only the actual Patent owners can claim the deduction under this section;<\/li><li>If the payments or royalty are received from an overseas nation, then the deduction can be claimed regarding the royalty payments received within six months of the end of the financial year in which the earnings are received;<\/li><li>The deduction under Section 80RRB is only available for individuals, Non-residents or HUF (Hindu Undivided Family) who cannot claim this deduction;<\/li><li>It is essential to generate documentary proof of the royalty payments; otherwise, the claim may be rejected;<\/li><li>The royalty amount is settled between two different parties as per the Mutual agreement. But in some conditions, the Government may grant an obligatory license to utilize the Patent in the public interest. Then in such a condition, the <strong>Patents Controller<\/strong><sup><a href=\"https:\/\/ipindia.gov.in\/newsdetail.htm?60\/\" class=\"text-primary\"><strong>[1]<\/strong><\/a><\/sup> of the Government will resolve the payable royalty amount. In this situation, the claimed deduction cannot be more than the amount of settlement. If you are also an inventor and hold a Patent from the Government for your original innovation, then you can claim for Section 80RRB deduction for Patent Royalty and save on your taxation liabilities.<\/li><\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span><strong>Conclusion<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Section 80RRB keeps tax liabilities for royalty income from Patents. If you are a creator or an inventor and invent a new thing, first obtain Patent Registration to avail Section 80RRB deduction for Patent royalty. Get the rights and receive royalty for your innovations. Against this royalty income, you can claim the deduction and cut your load of taxation. The deduction that can be claimed is royalty received or INR 3 lakhs, whichever is lesser.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/swaritadvisors.com\/blog\/provisional-patent-application\/\">All You Need to Know About Provisional Patent Application in India<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Section 80RRB was announced to make sure that someone who has done extraordinary work gets their reward. This facility is provided in the Income Tax Act for taxpayers attaining an income through patent royalty. The royalty received by a person on the Patent is suitable for tax deduction under Section 80RRB of the Income Tax [&hellip;]<\/p>\n","protected":false},"author":6,"featured_media":3849,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[55],"tags":[560],"acf":[],"_links":{"self":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/3845"}],"collection":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/comments?post=3845"}],"version-history":[{"count":12,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/3845\/revisions"}],"predecessor-version":[{"id":3858,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/3845\/revisions\/3858"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/media\/3849"}],"wp:attachment":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/media?parent=3845"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/categories?post=3845"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/tags?post=3845"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}