The provisions of section 80RRB are given below—
(A) Conditions - The following Conditions should be satisfied in order to Claim Deduction under Section 80RRB —
The taxpayer is an individual (may be an Indian citizen or foreign citizen).
Resident in India -
He is resident in India (he may be ordinarily resident or not ordinarily resident but deduction under section 80RRB is not available if he is non-resident).
Owner / Co-owner of Patent -
He is a patentee (he maybe a co-owner of patent). Patentee means the person (being the true and first inventor of the invention), whose name is entered on the patent register as the patentee, in accordance with the Patents Act, 1970.
Royalty from Patent -
He is in receipt of any income by way of royalty in respect of patent, which is registered under the Patent Act after March 31, 2003. It includes advance royalty which is not returnable. However, it does not include any consideration for sale of product manufactured with the use of patented process or of the patented article per se for commercial use. Further, any consideration, which is chargeable under the head “Capital gains” is, not royalty.
Furnish Form No. 10CCE -
The assessee shall have to furnish online a certificate in Form No. 10CCE, duly signed by the prescribed authority [i.e., the controller under section 1(b) of the Patents Act] along with the return of income. Return of income - Deduction under section 80RRB is not available unless it is claimed in the return of income.
Royalty from Foreign Sources -
Where any income is earned from sources outside India on which the deduction under this section is claimed, only so much of the income shall be considered, as is brought into India by, (or on behalf of) the assessee in convertible foreign exchange within a period of 6 months from the end of the previous year (or within such further period as RBI may allow in this behalf). Where any income is earned from sources outside India, a certificate certifying that the deduction has been correctly claimed in accordance with the provision of this section (in Form No. 10H), is required (to be submitted electronically).
Subsequent Revocation of Patent -
In case the patent is subsequently revoked by the Controller or the High Court or the name of the assessee is subsequently excluded from the patents register as patentee in respect of that patent, the deduction relatable to royalty income in respect of the period for which the patentee’s claim was not valid, shall be withdrawn. For this purpose, the assessment may be rectified within a period of 4 years from the end of the previous year in which such order is passed by High Court or Controller.
Double Deduction Not possible -
Where a deduction for any previous year has been claimed and allowed under section 80RRB in respect of any income referred to above, no deduction in respect of such income shall be allowed, under any other provision of the Act in any assessment year.