Deductions under 80rrb
Pradeep Agarwal
(Querist) 16 May 2018
This query is : Resolved
A client of mine has 2 patent applications pending before the Indian Patent Office. They have both been inspected and published. Now just awaiting response from department for final inspection and issuance.
In the mean time, he has been approached by various companies for licensing the patent.
1. Can he take royalty on Patents which are pending issuance? Will they be eligible for deduction under 80RRB?
2. If patent is not issued or rejected at a later date what happens to the income earned till now? Does he have to pay retrospective tax on that?
3. As deduction is only 3L max. he is considering assigning one to his wife. That way she can license it out. Will she be eligible to avail 80RRB?
4. What is the applicability/impact of GST in Royalty?
Please advise
P. Venu
(Expert) 17 May 2018
The issue requires professional consultation.
T. Kalaiselvan, Advocate
(Expert) 18 May 2018
1. Without an approval on this by the competent authority, any further action on this by your client is nothing but undertaking a risk, he would be held liable if the approval i not accorded for any reasons, so let him wait for few more days till he gets the orders in black and white.
2) The income earned is different to that of the approval of the patent. Indian Law requires patent applicants to seek approval from the National Biodiversity Authority (NBA) before filing patent applications that use biological resources, under The Biological Diversity Act, (BDA), 2002. Therefore why did he risk on it so soon even before getting approval.
Several patent applications are based on inventions that relate to material that does not come under the definition of “Biological Resources” under the BDA act.Thus, if patent application is in respect of the following, excluded subject matter, then approval from NBA before filing patent application is not required.
3) She may have to comply with the requirements accordingly.
4.The fact is that 12% royalty is applicable on authors. Notification No. 13/2017 Central Tax (Rate) & 10/2017 Integrated Tax (Rate) provide for RCM u/s 9(3). SlNo. 9 Provide for "Supply of services by an author, music composer, photographer, artist or the like by way of transfer or permitting the use or enjoyment of a copyright covered under clause (a) of sub-section (1) of section 13 of the Copyright Act, 1957 relating to original literary, dramatic, musical or artistic works to a publisher, music company, producer or the like." - Publisher, music company, producer or the like, located in the taxable territory is liable to pay GST.
