The Hindu Business Line : `Patents Controller can certify tax deduction on royalty income'

THE Central Board of Direct Taxes (CBDT) has ruled that the Controller General of Patents, Designs and Trade Marks would be the specified authority for certifying the claims made by a resident individual seeking tax deduction on royalty income earned from use of patents registered in India.

A new Section 80RRB was inserted in the Income-Tax Act, 1961 through the Finance Act 2003 that provided tax breaks on royalty income earned from patents. A deduction equivalent to the royalty income received or Rs 3 lakh, whichever is less, is allowed as deduction to an individual who is registered under the Patents Act as the true and first inventor in respect of an invention. Even a co-owner of a patent can opt for the deduction.

The CBDT has also prescribed the format of the form (FORM 10 CCE) that would have to be annexed with the return of income for claiming the deduction.

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