Section 80QQB

Authoring a book is a laborious and creative endeavour that requires significant effort and dedication. The government recognises the importance of promoting literary, artistic, and scientific works in India. It has introduced Section 80QQB of the Income Tax Act to provide tax incentives to authors who earn royalty income from selling their books.

What is Section 80QQB of the Income Tax Act?

Section 80QQB is a provision in the Indian Income Tax Act that allows authors to claim a deduction on their royalty income earned from the sale of books. This deduction is designed to encourage and support authors in their pursuit of creating literary, artistic, and scientific works and to promote the growth of the publishing industry in India.
The primary objective of Section 80QQB is to provide tax relief to authors who earn royalties from selling their books. By reducing their tax burden, authors can potentially reinvest their earnings into their creative pursuits, further contributing to the country's literary and cultural landscape.
 

Who is Eligible to Claim Deductions under Section 80QQB?

To claim deductions under Section 80QQB, an individual must meet the following criteria:

• Resident status: The author must be an individual in India or a resident but not ordinarily resident in India during the relevant financial year.
• Authorship: The individual must be the author or co-author of a book that is literary, artistic, or scientific in nature.

It is important to note that the deduction under Section 80QQB is available only to individual authors and not to companies, firms, or other entities.
 

Benefit of the Deduction under Section 80QQB

The primary benefit of the deduction under Section 80QQB is that it allows authors to reduce their taxable income by a certain amount, thus lowering their overall tax liability. This incentive aims to encourage and support authors in their creative pursuits, recognising the significance of literary, artistic, and scientific works in enriching the nation's cultural fabric.

By offering a tax deduction on royalty income, the government acknowledges authors' efforts and contributions, making it more financially viable for them to continue producing high-quality literary works.
 

Amount of Deduction under Section 80QQB

Under Section 80QQB, authors can claim a deduction on their royalty income, subject to a maximum limit. The deduction amount is calculated as follows:
Deduction = Lower of the following two amounts:

• Royalty income received during the financial year
• ₹3,00,000 (Rupees Three Lakh)

Notably, the deduction is available only on royalty income earned from selling books that fall under the category of literary, artistic, or scientific works. Royalties earned from other sources, such as textbooks, journals, diaries, or similar publications, are not eligible for the deduction under this section.
 

What are the Conditions for Claiming Deductions under Section 80QQB?

To claim deductions under Section 80QQB, authors must fulfil the following conditions:

• Residency: The author must be an individual in India or a resident but not ordinarily resident in India during the relevant financial year.
• Book category: The book for which the earned royalty income must fall under literary, artistic, or scientific work.
• Income tax return filing: The author must file their income tax return to claim the deduction.
• Royalty calculation: If the author has not received a lump sum payment, 15% of the value of the books sold during the year (before allowing any expenses) should be ignored when calculating the royalty income.
• Form 10CCD: The author must obtain Form 10CCD from the person or entity responsible for making the royalty payment. This form must be maintained along with the author's books of accounts and produced if requested by the Assessing Officer.
• Repatriation of foreign income: If the royalty income is earned from sources outside India, it must be repatriated to India within six months from the end of the financial year or within the period specified by the Reserve Bank of India (RBI). Additionally, the author must obtain Form 10H in such cases.
• Authors must carefully review and comply with these conditions to ensure their eligibility for the deduction under Section 80QQB.
   

What Documentation is Required to Claim Deductions under Section 80QQB?

Authors must maintain proper documentation and records to claim deductions under Section 80QQB. 

• The primary document required is Form 10CCD, which must be obtained from the person or entity responsible for making the royalty payment.
• Form 10CCD serves as proof of the royalty income earned by the author and must be duly filled out and signed by the payer. This form should be maintained along with the author's books of accounts and produced if requested by the Assessing Officer during the tax assessment process.
• Authors may also need to provide other supporting documents, such as contracts or agreements with publishers, royalty statements, and proof of book sales or royalty payments received, in addition to Form 10CCD.
• If the royalty income is earned from sources outside India, authors must also obtain Form 10H, a certificate confirming the repatriation of the foreign income to India within the specified time frame.

Proper documentation is crucial for authors to substantiate their claims for deductions under Section 80QQB and ensure compliance with the relevant tax regulations.
 

Penalties for Incorrect Claims Made under Section 80QQB

Claiming deductions under Section 80QQB requires utmost honesty and accuracy. Any attempt to make false or incorrect claims can result in penalties and legal consequences imposed by the tax authorities.

Conclusion

Section 80QQB of the Income Tax Act represents the government's commitment to promoting literary, artistic, and scientific works in India. By offering tax deductions on royalty income earned from the sale of books, this provision aims to encourage authors and support the growth of the publishing industry.
Authors who meet the eligibility criteria and comply with the specified conditions can benefit from this deduction, reducing their tax liability and potentially reinvesting their earnings into their creative pursuits. However, authors must maintain proper documentation and caution when claiming deductions to avoid penalties or legal consequences.