Section 80 QQB

What is Section 80 QQB of the Income Tax Act?

Section 80QQB of the Income Tax Act provides tax deductions for authors who earn royalties from the sale of their books. This section aims to encourage and support authors in their creative pursuits and promote the growth of the publishing industry in India. 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.

Who is Eligible to Claim Deductions under Section 80QQB?

Here are the key conditions for eligibility:

• Resident Author: The author must be a resident of India.

• Royalties from Books: The income must be from royalties received for the sale of books that are literary, artistic, or scientific in nature.

• Book Type: Books like textbooks, journals, and diaries are not eligible.

• Income Limit: The deduction is capped at Rs. 3 lakhs per year or the actual royalty income received, whichever is lower.

Amount of Deduction under Section 80QQB

The amount of deduction under Section 80QQB is the lower of the following two amounts:

• Rs. 3 lakhs: This is the maximum deduction allowed per year.

• Actual royalty income received: The deduction cannot exceed the actual amount of royalty income earned during the financial year.

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

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

1. Residency Status:

   • The author must be a resident individual in India. This includes both residents and residents but not ordinarily resident individuals.

2. Authorship:

   • The individual must be the author or a co-author of a book that is literary, artistic, or scientific in nature.

   • Importantly, the book should not be classified as a textbook, journal, diary, brochure, commentary, guide, magazine, newspaper, pamphlet, school textbook, or similar publication.

3. Income Tax Return Filing:

   • The author must file their income tax return to claim the deduction.

4. Form 10CCD:

   • The author must obtain Form 10CCD from the person or entity making the royalty payment.
     This form is crucial for claiming the deduction.

Advantages of the Deduction under Section 80QQB

The primary benefit of the deduction under Section 80QQB is a reduction in taxable income. This directly translates to lower tax liability for authors who meet the eligibility criteria.

Here are the benefits:

• Financial Incentive: The deduction encourages authors to continue writing and publishing books, contributing to the growth of the literary, artistic, and scientific fields.

• Tax Savings: By reducing taxable income, authors can save significantly on their taxes.

• Support for Creative Endeavors: The deduction can be used to reinvest savings into future projects, research, or other creative endeavours.

Documentation Required to Claim Deductions under Section 80QQB

To claim deductions under Section 80QQB, you'll need to provide the following documentation:

1. Form 10CCD:

   • This is the primary document required to claim the deduction.

   • It should be obtained from the person or entity making the royalty payment to you.

   • The form must be duly filled and signed by the payer.

2. Proof of Residency:

   • This can be your PAN card, Aadhaar card, or any other official document that proves your residency status in India.

3. Royalty Income Proof:

   • This can be in the form of royalty statements, bank statements, or any other relevant documents that show the amount of royalty income received.

4. Book Publication Details:

   • This includes the title of the book, the publisher's name, the ISBN number, and any other relevant details about the book.

5. Author's Identity Proof:

   • This can be your PAN card, Aadhaar card, or any other official document that proves your identity as the author of the book.

What is Form 10CCD?

Form 10CCD is a crucial document for authors in India who receive royalty income from the sale of their books. It serves as a certificate that allows authors to claim deductions under Section 80QQB of the Income Tax Act. This deduction helps reduce the taxable income of authors, ultimately leading to lower tax liabilities. To claim the deduction, authors must obtain a duly filled and signed Form 10CCD from the entity or individual making the royalty payment.

How to Calculate Your Income Tax?

Being aware of your tax responsibilities is essential for smart financial planning. An Income Tax Calculator provides a swift estimate of your tax liability by factoring in your income and applicable deductions. This digital tool streamlines the calculation process, minimizes mistakes, and saves valuable time. Leveraging an income tax calculator allows you to handle your finances effectively while maximizing your tax savings in compliance with the law.

Conclusion

By leveraging Section 80QQB, eligible authors can enjoy significant tax benefits, fostering a supportive environment for creativity and intellectual contributions. Understanding its terms is key to maximising this tax-saving opportunity.