In today’s world, having a source of income is the chief priority of every individual. With multiple opportunities to make a living, some resort to art, in the form of writing, painting, or music. With the intent to encourage artistic innovation and inventions, Section 80RRB for patent royalty is promoted in India.
Section 80RRB is a provision furnished to taxpayers by the Income Tax Department to provide deductions on the royalty of their patented works. This Act encourages individuals to pursue their work choices and earn more by claiming tax deductions through their patents.
Our world would be a different place if people would not have paid heed and value to inventions or artistic creations. After the development of any product/idea, to safeguard the ownership rights of the creator, a patent or exclusive rights came into being. According to the World Intellectual Property Indicators (WIPI) report, there were around 3.3 million patent applications at the end of 2018, and it was estimated that it will rise by 5.2% every year.
In simple words, an exclusive right of ownership given to a creator over their creation for a specific period of time is called a patent. A patent is given in exchange for the details of the creation. For instance, a new product was developed and patented by an individual. This person will now receive royalty, that is, an amount paid for the use of a patent till the date their patent is valid.
If an invention is patented, the inventors hold the sole right for it. However, it can be made available for public use in exchange for royalty, or the sum amount provided by the third party to use it for a specific time period. An income through royalty will depend on the creation and the agreement made by the third party.
There are certain terms and conditions to consider while applying for deductions under section 80RRB. They are:
If you are a taxpayer, you can claim income tax deductions under section 80RRB to save on taxation liabilities. You can simply fill the form 10H by logging in with your username and password at the website https://incometaxindiaefiling.gov.in/.
Here are a few crucial points for you to know when applying for 80RRB deductions:
If you receive royalties from your patents, you can claim tax deductions under section 80RRB of the Income Tax Act, 1961. The deduction helps lower the amount of tax payable at the end of the financial year. This, in turn, will lower your tax outgo by a considerable amount.