Section 80RRB of the Income tax Act, 1961 provides deduction in respect of any income by way of royalty. CONDITIONS – The following conditions should be satisfied in order to claim deduction u/s 80RRB. 1. The taxpayer is an individual (maybe an Indian Citizen or foreign citizen). 2. He is resident in India. 3. He is a patentee (he may be a co-owner of patent). Patentee means the person (being the true and first inventor of the invention), whose name is entered on the patent register as the patentee, in accordance with the Patents Act, 1970. It includes every such person (being the true and first inventor of the invention) where more than one person is registered as patentee under that Act in respect of that patent. 4. He is in receipt of any income by way of royalty in respect of patent, which is registered under the Patent Act after March 31, 2003. It includes any royalty income from working of or use of the patent. Further, it includes lump sum consideration for the transfer of all or any rights (including the granting of a license) in a patent, or for imparting of any information concerning the working or use thereof in India, or for rendering of any services in connection with the above. Lump sum consideration includes advance royalty which is not returnable. However, it does not include any consideration for sale of product manufactured with the use of patented process or of the patented article per se for commercial use. Further, any consideration, which is chargeable under the head “Capital gains” is not royalty. Where a compulsory license is granted in respect of any patent under the Patents Act, 1970, the income eligible for the purposes of this section shall not exceed the amount of royalty under the terms and conditions of a license settled by the Controller under that Act. 5. The assessee shall have to possess a certificate in Form No. 10CCE, duly signed by the prescribed authority. 6. Deduction u/s 80RRB is not available unless it is claimed in the return of income. Amount of Deduction If the aforesaid conditions are satisfied, the deduction under this section shall be equal to the whole of such income referred above, or Rs. 3,00,000, whichever is less. Other key points • Where any income is earned from sources outside India on which the deduction under this section is claimed, only so much of the income shall be considered, as is brought into India by, or on behalf of the assessee in convertible foreign exchange within a period of six months from the end of the previous year or within such further period as the competent authority may allow in this behalf. For this purpose, competent authority shall mean the Reserve Bank of India or such other authority as is authorised under any law for the time being in force for regulating payments and dealing in foreign exchange. Where any income is earned from sources outside India , a certificate certifying that deduction has been correctly claimed in accordance with the provision of this section (in Form No. 10H) is required. • In case the patent is subsequently revoked by the Controller or the High Court or the name of the assessee is subsequently excluded from the patents register as patentee in respect of that patent, the deduction relatable to royalty income in respect of the period for which the patentee’s claim was not valid, shall be withdrawn and the assessment may be rectified within a period of 4 years from the end of the previous year in which such order is passed by the High Court or Controller. • Where a deduction for any previous year has been claimed and allowed u/s 80RRB in respect of any income referred to above, no deduction in respect of such income shall be allowed under any other provision of the Act in any assessment year.