Applicable to: Indian Resident Individuals (Inventors/Patent Holders)
This section provides tax relief on royalty income from patented inventions, encouraging innovation and R&D in India.
Key Features (AY 2025-26)
1. Eligible Income
✅ Royalties from patents:
- Registered with Indian Patent Office
- For inventions in science/technology
❌Excludes:- Copyright income (covered under 80QQB)
- Lump-sum sale of patents
2. Deduction Details
| PARAMETER | LIMIT |
| Maximum Deduction | ₹3 lakh/year |
| Income Type | Royalties only (not capital gains) |
| Holding Requirement | Must be original patentee (not assignee) |
3. Claim Process
- Submit Form 10CCFwith ITR
- Attach Documents:
-
- Patent registration certificate
- Royalty payment proof
- PAN of payer (if royalty > ₹50,000)
Illustrative Example
Case: Scientist earns ₹4 lakh royalties from a solar tech patent
- Taxable Before 80RRB:₹4 lakh
- Deduction Claimed:₹3 lakh
- Taxable After 80RRB:₹1 lakh
- Tax Saved (@30%):₹90,000
Comparison with Similar Sections
| SECTION | APPLICABILITY | BENEFIT |
| 80RRB | Patentees | ₹3 lakh deduction |
| 80QQB | Authors | ₹3 lakh deduction |
| 35(2AB) | Corporate R&D | 200% weighted deduction |
Pro Tips for Inventors
- File Patents Early(processing takes 3-5 years in India)
- Use Form 27for annual patent working statements
- Combine with Startup Benefits(if commercializing through a DPIIT-recognized startup)
FAQs
Q: Can co-inventors claim full ₹3 lakh each?
A: Yes, if royalty is shared and each holds patent rights.
Q: Are foreign patent royalties eligible?
A: No, only patents registered in India qualify.
Q: Can companies claim this?
A: No, only individual inventors.
Conclusion
Section 80RRB rewards Indian innovators by reducing tax on patent royalties. Key action points:
- Register patents with IPO
- Maintain royalty agreements
- File Form 10CCF with ITR
