What is 80RRB Deduction?

If you earn royalty from a patent registered under the Patents Act, 1970, Section 80RRB can lower your tax by letting you deduct part (or all) of that royalty, subject to a cap. It’s designed to reward inventors by taking some tax pressure off genuine patent royalty income under the old tax regime.

Who can claim?

• You must be a resident individual in India; HUFs and non-residents can’t use this section.
• You should be the patent holder (original owner or co-owner/assignee) with the patent registered on or after 1 April 2003.
• The deduction is available only if you opt for the old tax regime.

What’s covered and the limit?

• Eligible income: royalty from a patent registered under the Patents Act, 1970.
• Maximum deduction: the lower of your actual royalty and ₹3,00,000 in a financial year.
• No “double dip”: the same royalty can’t be deducted again under another section.

A quick example to Understand how 80RRB Works?

Suppose Ramesh has a patent registered in 2015 and earns ₹2,80,000 in royalty in FY 2024–25. He can deduct the full ₹2,80,000 under 80RRB since it’s under the ₹3 lakh cap; if his total income was ₹10 lakh, his taxable income drops to ₹7.2 lakh after this deduction (assuming the old regime).

Foreign royalty? Possible, But there’s a catch

You can claim 80RRB on royalty received from abroad, but make sure the money is brought into India in convertible foreign exchange within permitted timelines to stay compliant. Keep documentation handy to support the claim.

Documents to keep ready

• Patent registration proof (registered on/after 1 April 2003).
• Royalty agreement and payment proofs.
• Form 10CCE: historically referenced as a certificate linked to 80RRB; many guides recommend keeping it/its details, though some filers note it may not always be mandated at submission—retain evidence regardless.

Conclusion

If you’re a resident individual earning royalty from a qualifying patent, 80RRB can shave up to ₹3,00,000 off your taxable income—provided you’re on the old regime and you keep the paperwork tight. It’s a practical way the law supports genuine innovation while keeping compliance straightforward.