Section 80RRB

Section 80RRB of the Income Tax Act allows eligible individuals to claim a deduction of up to ₹3,00,000 on income earned as royalty from patents registered under the Patents Act, 1970. This deduction aims to encourage innovation and reward creators for their intellectual contributions. Taxpayers must meet specific conditions and provide necessary documentation to avail of this benefit.

Read more
kapil-sharma
  • 4.8~ Rated
  • 7.7 Crore Registered Consumer
  • 50 Partners Insurance Partners
  • 4.2 Crore Policies Sold

Tax Saving Plans

  • Get Returns That Beat Inflation
  • Zero Capital Gains tax
  • Save upto Rs 46,800In Tax under section 80C^
We are rated~
rating
7.7 Crore
Registered Consumer
50
Insurance Partners
4.2 Crore
Policies Sold
Get Instant Tax Receipts
Save Upto ₹46,800 in Taxes Under Section 80C^
+91
Secure
We don’t spam
View Plans
Please wait. We Are Processing..
Your personal information is secure with us
Plans available only for people of Indian origin By clicking on "View Plans" you agree to our Privacy Policy and Terms of use #For a 55 year on investment of 20Lacs #Discount offered by insurance company
Get Updates on WhatsApp
Disclaimer: ^Section 80C allows annual deductions of up to ₹1.5 lacs from the taxable income. Section 10(10D) provides tax-free maturity benefits for investments of up to ₹2.5 Lacs/ year, on policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws. All plans listed here are of insurance companies’ funds.
We are rated~
rating
7.7 Crore
Registered Consumer
50
Insurance Partners
4.2 Crore
Policies Sold

What is Section 80RRB?

Section 80RRB of the Income Tax Act allows resident individuals in India to claim a deduction on royalty income received from patents. This deduction is aimed at encouraging innovation and research by providing tax benefits to individuals who generate income from their patented inventions. The deduction is limited to the lesser of the royalty income received, Rs. 3,00,000, or the gross total income derived from patents. To be eligible, the patent must be registered under the Patents Act, 1970. This deduction can significantly reduce the tax liability of individuals who receive royalty income from their patents.

Eligibility Criteria for Claiming Deductions Under Section 80RRB

To be eligible for claiming deductions under Section 80RRB, an individual must meet the following criteria:

  • Resident Individual: The individual claiming the deduction must be a resident of India. HUFs or non-residents are not eligible.

  • Original Patent Holder: The individual must be the original owner or co-owner of the patent. This means they must hold the patent rights directly, not through a third-party agreement.

  • Patent Registration: The patent must be registered under the Patents Act, 1970, on or after April 1, 2003.

  • Royalty Income: The income must be derived from royalties received from the patented invention.

  • Foreign Royalty: If the royalty income is received from a foreign source, it must be brought into India within six months of the end of the financial year and declared in the income tax return.

Amount of Deduction under Section 80RRB

The amount of deduction under Section 80RRB is limited to the lesser of the following:

  • Rs. 3,00,000: This is the maximum amount that can be claimed as a deduction.

  • Actual Royalty Income: If the royalty income received is less than Rs. 3,00,000, only the actual amount can be claimed as a deduction.

Save Tax Invest Today Save Tax Invest Today

What is a Patent?

A patent is a legal right granted by a government to an inventor for a limited period. This right protects the inventor's invention, which can be a new product, process, or a significant improvement to an existing one. In exchange for this exclusive right, the inventor must publicly disclose detailed information about their invention, contributing to the advancement of technology and knowledge. Patents encourage innovation by providing inventors with a strong incentive to develop new ideas, knowing that they will have exclusive rights to commercialize their inventions.

What are the Deductions Under Section 80RRB for the Royalties Received Against a Patent?

  • Maximum Deduction Limit: The maximum deduction allowable under Section 80RRB is Rs. 3,00,000. If the actual royalty income received is less than Rs. 3,00,000, the deduction can be claimed for the actual amount received.

  • Eligibility: Only resident individuals (not HUFs or non-residents) can claim this deduction. The individual must be the original patent holder.

  • Foreign Royalty Income: If royalty income is received from a foreign source, it must be brought into India within six months of the end of the financial year and declared in the income tax return.

  • Documentary Evidence: Adequate documentation, such as royalty agreements and payment receipts, is necessary to substantiate the claim.

  • Compulsory Licensing: If the government grants a compulsory license, the deduction cannot exceed the royalty amount determined by the Controller of Patents.

  • Tax Regime: It's important to note that this deduction is available only under the old tax regime.

Invest & Save upto ₹46,800 per annum in taxInvest & Save upto ₹46,800 per annum in tax

Things to Consider While Claiming Deduction Under Section 80RRB

While Section 80RRB offers a significant tax benefit for individuals receiving royalty income from patents, it's essential to consider the following points to ensure eligibility and maximize the deduction:

  1. Eligibility:

    • Resident Individual: Only resident individuals in India can claim this deduction. HUFs and non-residents are not eligible.

    • Original Patent Holder: The deduction is applicable only to the original patent holder.

    • Royalty Income: The income must be derived solely from royalties, not from the sale of products manufactured using the patented process or article.

  2. Foreign Royalty:

    • If the royalty income is received from a foreign source, it must be brought into India within six months of the end of the financial year.

    • A prescribed certificate from the relevant authority is required to claim the deduction.

  3. Documentation:

    • Adequate documentation, such as proof of royalty payments, is necessary to substantiate the claim.

FAQs

  • Are tax deductions under Section 80RRB permitted in the New Tax Regime?

    No, deductions under Section 80RRB are only applicable when opting for the Old Tax Regime.
  • What is the maximum tax deduction allowed under Section 80RRB of the Income Tax Act?

    A maximum tax deduction of ₹3,00,000 is permitted under Section 80RRB of the Income Tax Act, 1961.
  • Can royalty income from foreign sources be claimed for tax deductions under Section 80RRB?

    Yes, royalty income received from foreign sources qualifies for tax deductions under Section 80RRB.
  • Do Hindu Undivided Families (HUFs) qualify for Section 80RRB deductions under the Income Tax Act, 1961?

    No, deductions under Section 80RRB are not available to HUFs.
  • What benefits does Section 80RRB offer?

    Section 80RRB provides inventors with tax deductions on the royalty income earned from their patented inventions.
  • How long does the royalty payment last?

    The duration of royalty payments depends on the terms specified in the royalty clause of the lease agreement.

Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. This list of plans listed here comprise of insurance products offered by all the insurance partners of Policybazaar. The sorting is based on past 10 years’ fund performance (Fund Data Source: Value Research). For a complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website, www.irdai.gov.in
*All savings are provided by the insurer as per the IRDAI approved insurance plan.
^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.
¶Long-term capital gains (LTCG) tax (12.5%) is exempted on annual premiums up to 2.5 lacs.
~Source - Google Review Rating available on:- http://bit.ly/3J20bXZ

Income Tax articles

Recent Articles
Popular Articles
PNB NRO Sugam Term Deposit Scheme

11 Sep 2024

The PNB NRO Sugam Term Deposit Scheme offered by Punjab National
Read more
PNB NRE Rupee Sugam Term Deposit Scheme

11 Sep 2024

The PNB NRE Rupee Sugam Term Deposit Scheme is a specialized
Read more
PNB Bulk Fixed Deposit Scheme

11 Sep 2024

The PNB Bulk Fixed Deposit Scheme offers competitive FD interest
Read more
PNB Growth Fixed Deposit Scheme

11 Sep 2024

The PNB Growth Fixed Deposit Scheme is a fixed-term investment
Read more
PNB Floating Rate Fixed Deposit Scheme

11 Sep 2024

The PNB Floating Rate Fixed Deposit Scheme offers interest rates
Read more
Post Office FD Interest Rates
  • 02 Jul 2020
  • 47098
Post office FD interest rate ranges between 6.9% to 7.5% p.a. for tenures of 1 year to 5 years. These rates are
Read more
SBI FD Interest Rates
  • 26 Apr 2017
  • 2612062
SBI FD interest rates 2024 range between 3.50% to 7.10% p.a. for regular citizens and 4.00% to 7.60% p.a. for
Read more
Application for Withdrawal of Fixed Deposit
  • 03 Dec 2021
  • 25745
Fixed Deposits are the safest investment instruments. You invest the amount of your choice as the fixed deposit
Read more
FD Premature Withdrawal Penalty Calculator
  • 14 Jul 2021
  • 23881
FD Premature Withdrawal Penalty Calculator calculates the penalty imposed on the investor for premature
Read more
SBI FD Premature Withdrawal Penalty Calculator
  • 14 Jul 2021
  • 23358
A fixed deposit (FD) is an interest-bearing investment that offers assured returns for a fixed tenure. In this
Read more

top
Close
Download the Policybazaar app
to manage all your insurance needs.
INSTALL