Publishers earn a profit on selling a book, and they pay a percentage of the sales to the author as per agreed terms. This compensation received by the writer is termed as royalty and is taxable. However, you can also save tax as an author by utilising tax deduction under section 80QQB of Income-tax.
What is Section 80QQB? It provides tax rebate to an author residing in India who receives income through royalty or copyright fee for the books written by him or her.
Who can claim a deduction?
1. An author who is a resident of India or someone residing in India, but not an original resident of the country. A non-resident person is not eligible for deduction
2. A writer who has authored or co-authored a book of literary, artistic or scientific nature. Writers of journals, newspapers, magazines, diaries, pamphlets and brochures are not eligible.
Key conditions to save tax as an author:
1. Tax deduction under section 80QQB is available for either the royalty amount or ₹3 lakhs, whichever is lower.
2. Income should have been received as a lump sum amount from the publisher as a royalty payment that cannot be refunded.
3. Income in excess 15% of book sales, after allowing for expenses during the year, is ignored in case it is not received in a lump sum.
4. Tax deduction under section 80QQB can be availed by a writer whose book sells copies abroad. However, this income should be brought back in the country within 6 months (from the end of the earlier year) after converting foreign exchange to Indian Rupees.
How to claim tax benefit?To save tax as an author, the assessee has to provide a certificate in form number 10CCD, verified by the payment making authority. This certificate needs to be submitted at the time of Income-tax return (ITR) filing by the author. Writers who earn their income from sales proceeds outside India need to fill form 10H, duly verified, as a certificate, when filing their ITR in a financial year. It is to be noted that once a writer has availed tax deduction as per section 80QQB for a financial year, he or she is not eligible for any further tax rebate on income from any such sources for that assessment year.