Section 80RRB

Section 80RRB: An Overview

The Income Tax Act has a provision known as Section 80RRB for taxpayers who receive income from royalties on patents. According to Section 80RRB of the Income Tax Act, a person may deduct the royalty they paid on a patent. Royalty, as we are aware, is the money given to the person for the use of the patent. Therefore, the Section 80RRB deduction seeks to promote invention and patenting in India. Read along to find out more!

Benefits of Section 80RRB

Tax obligations for royalties received from patents are avoided under Section 80 RRB. If you are an inventor and create new goods, patent them to qualify for Section 80RRB deductions. Get the sole rights, and get paid for your inventions. You can make a deduction claim against this income to lessen your tax obligation. The lower of the royalty payments or ₹3 lakh is the deduction that may be made.

Eligibility to Claim Section 80 RRB

• The person requesting the deduction must reside in India (HUF or Non-residents are not permitted to request this deduction). The deduction is only available to residents of India.
• To be eligible for a deduction, the taxpayer must be either the sole or joint owner of the invention and possess an original patent. It is not possible to apply for this deduction without the original patent.
• The taxpayer's original patent needs to be registered under the 1970 Patent Act.
• To be eligible for the deduction, you must present the documents that serve as proof of your royalty payments
• After March 31, 2003, the taxpayer is required to receive royalties in accordance with patents under the Patent Act. This also applies to non-refundable advance royalties. Anything that is subject to the capital gains tax is not regarded as royalty.
• To claim the deduction, the taxpayer must submit an income tax return online.
• Along with the income tax return, the taxpayer must submit an online certificate in FORM No. 10CCE that has been authorised by the appropriate party.
• No deduction will be permitted under any other provision of the Income Tax Act for any assessment year if one has already been made for the claim of royalty income in prior years under section 80RRB. That implies that no assessment year will see a double deduction.

Amount of Deduction Under Section 80RRB

Keep in mind all the points mentioned below who want to avail of tax deductions under section 80 RRB:

• According to Section 80RRB of the Income Tax Act, a person may deduct the royalty they paid on a patent. In rare circumstances, the entire income derived from a patent by an individual may be split into royalty and other income not covered by royalty. In all circumstances, a tax deduction is allowed for the royalty earned alone.
• The owner of a patent for a certain invention may deduct up to three lakh rupees in taxes from income obtained from patents. Only the real income the assessee received as royalties may be deducted in cases where the income is less than ₹3 lakhs.
• A person who receives the royalty from foreign sources has six months from the end of the tax year in which the income was received to submit their deduction request. Patent owners who are unable to provide the necessary proofs risk having their deductions rejected.

Why Vakilsearch?

It is very difficult to understand the legal loopholes and benefits by commoners like us. To avoid mistakes and misunderstandings in filing taxes, various form filling, and eligibility criteria for specific deductions, you need the assistance of the best legal experts. To help you with it, we have our best legal experts who will guide you.

Under section 80 RRB, we make sure the documents are collected on time and finish the legal proceedings on time!