Deductions are amounts allowed to be reduced while computing the total income of an assessee, subject to the conditions prescribed under the income-tax provisions. Certain deductions are linked to a specific type of income or to the status and circumstances of the taxpayer.
Sections 80QQB, 80RRB and 80TTA provide deductions in respect of specified incomes such as royalty income of authors, royalty income from patents and interest on savings account deposits. Section 80U, on the other hand, provides a deduction to a resident individual who is certified as a person with disability.
For examination purposes, the eligibility conditions, nature of income and maximum amount of deduction under each section are important.
Section 80QQB – Deduction in Respect of Royalty Income of Authors
Section 80QQB provides a deduction in respect of royalty or copyright income earned by an author of certain books other than textbooks.
The deduction is available to an individual who is resident in India and is an author. The gross total income of the individual must include income earned in the exercise of the author’s profession from the copyright of a qualifying book.
The income may arise from a lump sum consideration received for the assignment or grant of any interest in the copyright of a book. It may also arise in the form of royalty or copyright fees received in respect of such a book.
The book must be a work of literary, artistic or scientific nature.
The term author also includes a joint author. Therefore, a person who has jointly authored a qualifying book may also be covered by the provisions of Section 80QQB.
Amount of Deduction under Section 80QQB
The deduction under Section 80QQB is equal to the whole of the eligible royalty or copyright income or ₹3 lakh, whichever is less.
Therefore:
Deduction under Section 80QQB = Eligible Royalty Income or ₹3,00,000, whichever is lower
For example, if an eligible author earns ₹2 lakh as qualifying royalty income, the deduction is ₹2 lakh. If the qualifying royalty income is ₹5 lakh, the maximum deduction is restricted to ₹3 lakh.
Books Covered under Section 80QQB
The deduction is available only in respect of books of a literary, artistic or scientific nature.
For the purpose of Section 80QQB, the term “books” does not include certain publications.
Brochures, commentaries, diaries, guides, journals, magazines, newspapers, pamphlets, school textbooks, tracts and other publications of a similar nature are not treated as qualifying books for this deduction.
Thus, merely earning income as a writer does not automatically make the income eligible for deduction. The nature of the book and the prescribed conditions must be considered.
Royalty Not Received as Lump Sum under Section 80QQB
Where royalty or copyright fees are not received as a lump sum consideration in lieu of all the rights of the author in the book, a special restriction applies.
In such a case, the amount of royalty income, before allowing expenses attributable to such income, which exceeds 15% of the value of the books sold during the previous year is ignored for the purpose of the deduction.
This provision restricts the amount of eligible royalty income where the payment is not a lump sum consideration for all the author’s rights in the book.
Foreign Royalty Income under Section 80QQB
Royalty or copyright income may also be earned from a source outside India.
Such foreign income is taken into account for the purpose of Section 80QQB only to the extent it is brought into India by or on behalf of the assessee in convertible foreign exchange.
The amount must generally be brought into India within six months from the end of the previous year in which the income is earned. A further period may be allowed by the competent authority.
For this purpose, the competent authority means the Reserve Bank of India or another authority authorised under the applicable law for regulating foreign exchange payments and dealings.
Certificate Requirement under Section 80QQB
The deduction under Section 80QQB is subject to the furnishing of the prescribed certificate.
The assessee is required to furnish a certificate in the prescribed form and manner, duly verified by the person responsible for making the royalty or copyright payment. The certificate must contain the prescribed particulars.
In the case of income earned from a source outside India, the prescribed certificate from the prescribed authority is also required.
No Double Deduction under Section 80QQB
Where a deduction has been claimed and allowed under Section 80QQB in respect of a particular income, deduction in respect of the same income cannot again be claimed under another provision.
Thus, the same royalty or copyright income cannot be used for claiming multiple deductions.
Meaning of Lump Sum under Section 80QQB
For Section 80QQB, the term lump sum includes a non-returnable advance payment received on account of royalty or copyright fees.
Therefore, a non-refundable advance received against royalty or copyright fees may be treated as a lump sum for the purpose of this section.
Section 80RRB – Deduction in Respect of Royalty on Patents
Section 80RRB provides a deduction in respect of royalty income from patents.
The deduction is available to an assessee who is an individual, resident in India and a patentee.
The individual must receive royalty income in respect of a patent registered on or after 1 April 2003 under the Patents Act, 1970.
The gross total income of the assessee must include the eligible royalty income from such patent.
Amount of Deduction under Section 80RRB
The deduction under Section 80RRB is equal to the whole of the eligible royalty income or ₹3 lakh, whichever is less.
Therefore:
Deduction under Section 80RRB = Eligible Patent Royalty Income or ₹3,00,000, whichever is lower
For example, if eligible patent royalty income is ₹2.50 lakh, the deduction is ₹2.50 lakh. If eligible royalty income is ₹4 lakh, the deduction is restricted to ₹3 lakh.
Meaning of Patentee under Section 80RRB
A patentee is the person who is the true and first inventor of the invention and whose name is entered in the patent register as the patentee according to the Patents Act, 1970.
Where more than one true and first inventor is registered as a patentee in respect of the patent, each such person is included within the meaning of patentee.
The deduction is therefore linked to the status of the individual as a qualifying patentee.
Patent Covered under Section 80RRB
For Section 80RRB, a patent means a patent granted under the Patents Act, 1970.
The term also includes a patent of addition.
An important examination condition is that the royalty must relate to a patent registered on or after 1 April 2003.
Compulsory Licence and Royalty under Section 80RRB
Where a compulsory licence is granted in respect of a patent under the Patents Act, 1970, the amount of royalty eligible for deduction is subject to a restriction.
The royalty income considered for deduction cannot exceed the amount of royalty determined according to the terms and conditions of the licence settled by the Controller under the Patents Act.
Thus, the eligible royalty is restricted to the prescribed amount in the case of a compulsory licence.
Foreign Royalty Income under Section 80RRB
Where patent royalty income is earned from a source outside India, only the amount brought into India in convertible foreign exchange is considered for deduction.
The income must generally be brought into India within six months from the end of the previous year in which it is earned.
A further period may be allowed by the competent authority.
Therefore, foreign royalty income is subject to the prescribed foreign exchange and time conditions.
Certificate Requirement under Section 80RRB
Deduction under Section 80RRB is not allowed unless the assessee furnishes the prescribed certificate.
The certificate must be in the prescribed form, duly signed by the prescribed authority and must contain the required particulars.
In the case of income earned from a source outside India, the prescribed certificate from the relevant authority is also required.
No Double Deduction under Section 80RRB
Where a deduction has been claimed and allowed under Section 80RRB for a particular royalty income, deduction in respect of the same income cannot be claimed again under another provision.
This provision prevents double deduction of the same patent royalty income.
Section 80TTA – Deduction in Respect of Interest on Savings Account Deposits
Section 80TTA provides a deduction in respect of interest income earned on deposits in a savings account.
The deduction is available to an individual or a Hindu Undivided Family whose gross total income includes eligible interest income from a savings account.
However, an assessee covered by Section 80TTB is excluded from the application of Section 80TTA.
The deduction is specifically related to interest on savings account deposits and does not apply to time deposits.
Eligible Savings Accounts under Section 80TTA
The savings account may be maintained with a banking company to which the Banking Regulation Act, 1949 applies.
It may also be maintained with a co-operative society engaged in the business of banking. This includes a co-operative land mortgage bank or a co-operative land development bank.
Interest on an eligible savings account maintained with a Post Office is also covered.
Thus, eligible savings account interest may arise from:
A Banking Company
A Co-operative Society engaged in Banking
A Post Office
Amount of Deduction under Section 80TTA
Where the aggregate eligible savings account interest does not exceed ₹10,000, the whole amount of such interest is allowed as a deduction.
Where the eligible interest exceeds ₹10,000, the deduction is restricted to ₹10,000.
Therefore:
Deduction under Section 80TTA = Eligible Savings Account Interest or ₹10,000, whichever is lower
For example, if eligible savings interest is ₹7,000, the deduction is ₹7,000. If savings interest is ₹18,000, the deduction is limited to ₹10,000.
Time Deposits Not Covered under Section 80TTA
Section 80TTA does not provide a deduction in respect of interest on time deposits.
A time deposit means a deposit that is repayable on the expiry of a fixed period.
Therefore, the deduction under Section 80TTA is specifically related to savings account interest and not interest from fixed-period deposits.
The important examination distinction is:
Savings Account Interest → Eligible under Section 80TTA subject to conditions
Time Deposit Interest → Not covered under Section 80TTA
Savings Account of Firm, AOP or BOI
A special restriction applies where interest income arises from a savings account held by or on behalf of a firm, Association of Persons or Body of Individuals.
In such a case, deduction under Section 80TTA is not allowed in respect of that income while computing the total income of a partner of the firm, a member of the association or an individual of the body.
Thus, a partner or member cannot separately claim the deduction for interest derived from such an account.
Section 80U – Deduction in Case of a Person with Disability
Section 80U provides a deduction to a resident individual who is certified by the medical authority as a person with disability.
The individual must have the prescribed disability at any time during the relevant previous year.
Unlike Sections 80QQB, 80RRB and 80TTA, Section 80U is not based on earning a particular type of income. The deduction is based on the eligible disability status of the resident individual.
Amount of Deduction under Section 80U
A resident individual certified as a person with disability is allowed a deduction of ₹75,000.
Where the individual is a person with severe disability, the deduction is ₹1,25,000.
Therefore:
Person with Disability → ₹75,000 deduction
Person with Severe Disability → ₹1,25,000 deduction
For examination purposes, severe disability generally refers to a person having 80% or more of one or more specified disabilities, or a person otherwise covered by the prescribed definition of severe disability.
Medical Certificate under Section 80U
An individual claiming deduction under Section 80U is required to furnish a copy of the certificate issued by the prescribed medical authority in the prescribed form and manner.
The certificate supports the individual’s status as a person with disability or severe disability.
Where the certificate requires reassessment of the extent of disability after a specified period, a new certificate must be obtained after the earlier certificate expires.
The deduction cannot continue for the relevant subsequent period unless the required new certificate is obtained and furnished according to the prescribed requirements.
Disability for the Purpose of Section 80U
The meaning of disability is determined according to the relevant disability laws referred to in Section 80U.
The provision also covers specified conditions such as autism, cerebral palsy and multiple disabilities according to the applicable statutory definitions.
The disability must be certified by the prescribed medical authority.
Therefore, self-declaration of disability is not sufficient for claiming the deduction under Section 80U.
Difference between Sections 80QQB, 80RRB, 80TTA and 80U
Section 80QQB relates to royalty or copyright income of resident authors from qualifying books other than textbooks. The maximum deduction is ₹3 lakh.
Section 80RRB relates to royalty income of a resident individual from a qualifying patent registered on or after 1 April 2003. The maximum deduction is ₹3 lakh.
Section 80TTA relates to interest income on eligible savings account deposits of an individual or HUF, other than an assessee referred to in Section 80TTB. The maximum deduction is ₹10,000.
Section 80U provides a deduction to a resident individual certified as a person with disability. The deduction is ₹75,000 for a person with disability and ₹1,25,000 for a person with severe disability.
Exam Focus
Section 80QQB → Royalty or Copyright Income of Authors
The assessee must be a resident individual and an author.
The book must be of a literary, artistic or scientific nature.
The deduction is eligible income or ₹3 lakh, whichever is less.
Textbooks, newspapers, magazines, journals, guides, brochures and similar publications are not treated as qualifying books.
Section 80RRB → Royalty Income from Patents
The assessee must be a resident individual and a patentee.
The patent must be registered on or after 1 April 2003 under the Patents Act, 1970.
The deduction is eligible royalty income or ₹3 lakh, whichever is less.
Section 80TTA → Interest on Savings Account Deposits
The deduction is available to an individual or HUF, other than an assessee referred to in Section 80TTB.
The maximum deduction is ₹10,000.
It covers eligible savings accounts with banks, co-operative banking societies and Post Offices.
Time deposit interest is not covered under Section 80TTA.
Section 80U → Person with Disability
The deduction is available to a resident individual certified by the prescribed medical authority.
The deduction is ₹75,000 for a person with disability.
The deduction is ₹1,25,000 for a person with severe disability.
Severe disability generally means 80% or more disability according to the applicable definition.
The most important figures for examination are:
80QQB = Maximum ₹3,00,000
80RRB = Maximum ₹3,00,000
80TTA = Maximum ₹10,000
80U = ₹75,000 or ₹1,25,000 in case of severe disability