Deduction in respect of royalty on patents

When an assessee, an individual who resides in India and is a patentee, receives royalties related to patents registered on or after April 1, 2003 under the Patents Act, 1970 (39 of 1970), and his gross total income from the prior year includes royalties, he is permitted, in accordance with and subject to the rules of this section, to deduct an amount from such income equal to the full amount of the royalties received. The revenue by means of royalty for the purpose of enabling deduction under this section should not exceed the total amount of royalty under the terms and circumstances of a licence negotiated by the Controller under the Patents Act, 1970 (39 of 1970) when a compulsory licence is issued in respect of any patent.

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Additionally, any income derived from sources outside of India will only be taken into account for the purposes of this section if it is brought into India by the assessee or on their behalf in convertible foreign currency within six months of the end of the prior year in which it was derived. No deduction under this subsection shall be granted unless the assessee encloses with the return of income a certificate in the appropriate form, properly signed by the authorised authority, including the information that may be required.

In accordance with this provision, no deduction for income derived from sources outside of India shall be permitted unless the assessee submits a certificate in the specified form, from the authority or authorities as may be required, together with the income tax return. When a deduction for a prior year has been requested and approved in relation to any income mentioned in this section, no other provision of this Act will permit a deduction in relation to that income in any assessment year.

Everyone should know about tax exemption.

The definition of "Controller" in the Patents Act of 1970 (39 of 1970), section 2, subsection (1), clause (b), must apply. "Patent" refers to a patent (including an additional patent) issued in accordance with the Patents Act of 1970 (39 of 1970). "Patentee" refers to the true and original inventor of the invention whose name is entered on the patent register as the patentee in accordance with the Patents Act, 1970 (39 of 1970), and includes each such person where more than one person is registered under that Act as the patentee with respect to that patent.

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