Section 80RRB: Deduction for Royalty Income from Patents
CA Meet Dhrangadhariya 
April 21, 2025
CA Meet Dhrangadhariya April 21, 2025
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Last updated: 14 August 2026 · Written and reviewed by CA Meet Dhrangadhariya, CSM & Co LLP
Quick summary
An inventor who earns royalty from a patent gets a deduction under section 80RRB, up to ₹3,00,000 a year. From Tax Year 2026-27 the provision is section 152 of the Income-tax Act, 2025. For FY 2025-26 (assessment year 2026-27) it is still section 80RRB of the 1961 Act.
An individual who:
A patentee is the true and first inventor recorded as the patentee under the Patents Act, and this includes joint patentees recorded as true and first inventors. Someone who bought or licensed a patent is not a patentee. HUFs, companies and non-residents are out.
Royalty on a patent means consideration for transferring any or all rights in the patent (including granting a licence), giving information about the working or use of the patent, using the patent, or services connected with these. It does not include consideration that is capital gains, or the price for selling a product made with a patented process or the patented article for commercial use. A non-returnable advance counts as a lump sum.
The lower of the royalty income included in gross total income and ₹3,00,000. If a compulsory licence has been granted under the Patents Act, the royalty counted cannot be more than the royalty fixed by the Controller of Patents.
Income from a source outside India counts only to the extent it is brought into India in convertible foreign exchange within six months from the end of the tax year in which it is earned, or within any further period the Reserve Bank of India or other competent authority allows. A certificate from the prescribed authority must be filed with the return.
If a deduction has been allowed for a year on this income, the same income cannot be deducted under any other provision of the Act in any year.
The deduction is not allowed in the new tax regime. Section 202 of the 2025 Act disallows Chapter VIII deductions other than sections 124(1), 124(2), 125(2) and 146.
Meera is a resident individual and the registered patentee of a process patent granted in 2018. In the year she receives ₹4,00,000 as royalty from a licensee and has spent ₹50,000 on professional fees related to earning it.
| Item | Amount in ₹ |
|---|---|
| Royalty received | 4,00,000 |
| Less: expenses allowed | 50,000 |
| Royalty income in gross total income | 3,50,000 |
| Deduction under section 80RRB (lower of 3,50,000 and 3,00,000) | 3,00,000 |
| Income left after the deduction | 50,000 |
Her ₹50,000 is taxed at her normal slab rates, along with any other income.
| Basis | Section 80QQB (section 151) | Section 80RRB (section 152) |
|---|---|---|
| Income | Royalty from books, in the exercise of the profession of an author | Royalty from a registered patent |
| Claimant | Resident individual author | Resident individual patentee |
| Limit | Lower of income and ₹3,00,000 | Lower of income and ₹3,00,000 |
| Certificate | Form 10CCD, now Form 36 | Form 10CCE, now Form 37 |
| Regime | Old regime only | Old regime only |
A resident individual who is a patentee and receives royalty on a patent registered under the Patents Act, 1970 on or after 01/04/2003. HUFs and non-residents cannot claim it.
The lower of the royalty income and ₹3,00,000 in a year.
The true and first inventor recorded as the patentee under the Patents Act, 1970, including joint patentees recorded as true and first inventors. A person who merely bought or licensed the patent does not qualify.
No. Consideration for selling a product made with a patented process, or the patented article, for commercial use is excluded, as is anything that is capital gains.
No. It is available only in the old tax regime.
This article is for general informational purposes only and should not be considered professional advice. Please consult a qualified expert for advice tailored to your specific situation. The author and website owner are not liable for any errors or actions based on this content.
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