Earning from your creativity is rewarding—but it also comes with tax implications. If you’re an author earning royalty income in India, it’s important to understand how it’s taxed, what deductions you can claim, and how to make the most of the benefits offered under the Income Tax Act, 1961.
For resident authors, royalty income is taxed under the head "Profits and Gains of Business or Profession" or "Income from Other Sources," depending on the nature of the agreement and the regularity of income.
As per the Finance Act, 2023, the withholding tax rate on royalty income for non-residents has been increased from 10% to 20%, plus applicable surcharge and cess, effective from 1 April 2023 . However, non-residents may avail of beneficial rates under applicable Double Taxation Avoidance Agreements (DTAAs), subject to certain conditions.
Authors can claim deductions on royalty income under Section 80QQB, provided specific conditions are met. This deduction aims to promote literary, artistic, and scientific works by offering tax relief to authors.
This guide breaks down everything you need to know about royalty income taxation, including how Section 80QQB can reduce your tax burden.
What is royalty income and how is it taxed?
Royalty income refers to earnings from the use or sale of intellectual property—this includes books, scientific research, or artistic creations. In India, royalty income is taxable under:
- Profits and Gains of Business or Profession, or
- Income from Other Sources
The category depends on how frequently and professionally the author earns the income.
For non-resident authors, the withholding tax on royalty income was increased from 10% to 20% (plus surcharge and cess) from 1 April 2023 under the Finance Act, 2023. However, this can be reduced under applicable Double Taxation Avoidance Agreements (DTAAs).
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Tax deduction on royalty income: Section 80QQB
To promote India’s literary, artistic, and scientific legacy, Section 80QQB of the Income Tax Act offers tax deductions on royalty income for resident authors.
Who Can Claim It?
Resident individuals who are authors (or joint authors) of books in literary, artistic, or scientific genres can claim this deduction.
Not covered: Textbooks, journals, guides, diaries, newspapers, and similar educational or commercial publications.
How Much is the Deduction?
You can claim the lower of Rs. 3 lakh or the actual royalty income received.
Example:
If you earn Rs. 5,00,000 as royalty income, you can claim Rs. 3,00,000 under Section 80QQB. If you earn Rs. 2,00,000, then that full amount is eligible for deduction.
Conditions to claim 80QQB Deduction
To avail the tax deduction under Section 80QQB, the following must be true:
- Residency: You must be a resident (or resident but not ordinarily resident) in India.
- Nature of Work: The book must be literary, artistic, or scientific—not a textbook or guide.
- Royalty Income Type: Can be a lump sum or recurring.
- Foreign Earnings: If royalty is earned abroad, bring it to India within 6 months of the end of the financial year (or within extended time allowed by the RBI).
- Proof of Income: You must get a Form No. 10CCD certificate from the person paying the royalty.
Why documentation matters: Form 10CCD acts as proof and is essential to claim the deduction. Don’t skip it.
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Gross total income of an author: What’s included?
Your gross total income is the sum of all earnings before tax deductions. It includes:
- Royalty income
- Business income
- Other income (like interest or dividends)
Example:
If you earn Rs. 5,00,000 from royalty and Rs. 3,00,000 from freelance work:
- Gross Total Income = Rs. 8,00,000
- Eligible Deduction under 80QQB = Rs. 3,00,000
- Taxable Income = Rs. 5,00,000
This deduction can significantly reduce your tax liability.
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Royalty Deduction Limits Under Section 80QQB
Let’s summarise the deduction specifics:
| Criteria | Deduction Detail |
| Maximum Limit | Rs. 3 lakh or actual royalty income, whichever is lower |
| Type of Books | Only literary, artistic, or scientific (non-educational) |
| Eligible Payment Type | Lump sum or recurring royalty |
| Ineligible Sources | Textbooks, guides, newspapers, journals, etc. |
Example Scenarios
Scenario 1: Full Deduction Applicable
Mr. A, a resident Indian author, earns:
- Rs. 5,00,000 as royalty (from a scientific book)
- Rs. 3,00,000 from consulting work
He can claim Rs. 3,00,000 under Section 80QQB, bringing his taxable income down to Rs. 5,00,000.
Scenario 2: No Other Income, Still Beneficial
Ms. B, a literary author, earns:
- Rs. 2,00,000 from book royalties (from the US, brought to India within 6 months)
She can claim the full Rs. 2,00,000 deduction.
Taxable income: Rs. 0
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Also Read: Everything about Taxation
Final Word
If you are an author earning royalty income in India, understanding Section 80QQB is essential to avoid overpaying tax. By claiming up to Rs. 3 lakh in deduc
