Section 80QQB of the Income Tax Act 1961 is an important beneficial provision designed to incentivize the authors and composers of certain literary and musical work by allowing them to claim a tax deduction on certain royalties earned from their work. The deduction is available to authors, composers, photographers, and film producers, who have literary or musical works published or communicated to the public through any medium. The purpose of the provision is to provide an incentive for individuals to engage in the production of literary or musical works for the public domain. The Deduction is available for royalty earned from the sale, distribution or subscription of such works as well as from the copyright rights and copyright licenses. This article will provide a brief overview of the provisions of section 80QQB, as well as an in-depth analysis of its structure and operation.
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Overview of Section 80QQB
Section 80QQB of the Income Tax Act 1961 is an incentive-oriented provision which allows authors and composers to claim a tax deduction on certain royalty income earned from their work. The deduction is available to authors, composers, photographers, and film producers. The deduction is available up to a total deduction of Rs.3 lakhs in a financial year, provided that the royalty earned is in excess of Rs.150,000 in the year. The provision applies to Indian residents who are authors, composers, photographers, or film producers of literary or musical works published or communicated to the public through any medium.
Structure and Operation of Section 80QQB
Section 80QQB of the Income Tax Act 1961 is divided into two parts. The first part relates to the eligibility for the tax deduction and the second part deals with the calculation of the amount of tax deduction.
Calculation of Deduction under Section 80QQB
The second part of section 80QQB is related to the calculation of the amount of the deduction. The calculation of the amount of deduction available under section 80QQB is also quite simple. The amount of deduction under section 80QQB is equal to the amount of the net royalty income earned (in excess of Rs.150,000) in the relevant financial year or Rs.3 lakhs, whichever is lower. The deduction is available for royalty income earned from the sale, distribution or subscription of such works as well as from the copyright rights and copyright licenses.
Eligibility Criteria for Deduction under Section 80QQB
The eligibility criteria are quite straightforward. The authors, composers, photographers, or film producers must be an Indian resident, must have received a net royalty income in excess of Rs.150,000 during the financial year and the work must have been published or communicated to the public through some medium. The first two criteria are simple to satisfy as long as the author or composer can show that their income during the relevant financial year exceeds Rs.150,000. The third criterion is also relatively straightforward as long as the author or composer can show that the work has been published or communicated to the public through some medium.
Conclusion
Section 80QQB of the Income Tax Act 1961 is a beneficial tax provision which provides authors, composers, photographers, and film producers with an incentive to engage in the production of literary or musical works for the public domain by allowing them to claim a tax deduction on certain royalty incomes earned from their work. The provision has a two-fold structure, with one part dealing with the eligibility for the tax deduction and the other with the calculation of the amount of deduction. The eligibility criteria are straightforward, and the calculation of the deduction is also simple to understand.
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Disclaimer: “Neither this article nor the information contained herein shall in any way be construed as forming a contract or shall constitute professional advice required before acting upon any matter. CA Sharad Kumar Sharma has taken all due care in the preparation of this article for accuracy in its contents at the time of publication. However, no liability shall be accepted by him in the event of any direct, indirect or consequential damages arising out of or in any way connected with the use of this article or its contents. “
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Is there a minimum limit of earning royalty income of ₹150000 ? Because i checked in the Act and i did not find that provision anywhere.Please clear my confusion.