How is royalty from e-book gross sales handled for income-tax?
Can modest revenue/royalty acquired on e-book gross sales from any Indian writer be proven below different revenue within the ITR 1 kind?
— Kapurash
It is assumed that you’re a resident and extraordinary resident (ROR) of India.
Income/royalty from e-book gross sales could be categorized as revenue from different sources (IOS) or income and positive aspects from enterprise and career (PGBP). Whether an revenue is to be proven below IOS or PGBP is determined by varied elements (e.g. quantity, income, frequency, and many others.) and info of every case.
In case you’re primarily engaged within the enterprise/career of authoring books for incomes royalty/commercial revenue, and many others., chances are you’ll take into account reporting it below PGBP, else chances are you’ll take into account reporting the identical below IOS.
As per the directions issued for ITR Forms for FY 2020-21, Form ITR 1 could also be used for tax return submitting (the place the overall revenue doesn’t exceed ₹50 lakh) reporting revenue from wage, one home property, and curiosity revenue/household pension/ dividend taxable below the top IOS. Further, the shape can’t be used to say any deduction of bills referring to the revenue below the top IOS (besides household pension). Therefore, ITR 1 will not be the suitable kind for disclosing the royalty/commercial revenue below the top “revenue from different sources” and chances are you’ll use ITR 2 for submitting the tax return. ITR 3 is relevant if revenue is disclosed below PGBP.
To corroborate the disclosures regarding the revenue, if required earlier than the Indian tax authorities, the taxpayer might showcase the settlement entered into with the writer, based mostly on computation/ reconciliation of revenue, settlement/affirmation from the writer on the quantum, and many others., as back-up paperwork.
Deduction could also be claimed in respect of bills (not like capital expenditure) incurred wholly and completely in incomes the revenue chargeable below IOS. Thus, chances are you’ll deduct the bills wholly and completely incurred in incomes the royalty/commercial revenue, whereas computing the taxable revenue.
Deduction, below part 80QQB (topic to threshold restrict of ₹3 lakh) could also be thought of if the required situations are fulfilled (together with acquiring a certificates in Form 10CCD from the Indian writer).
Parizad Sirwalla is companion and head, world mobility companies, tax, KPMG in India.
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