Royalty Income Deduction for Authors and Patentees: Sections 151 and 152 (Income-tax Act, 2025)

The Income-tax Act, 2025 gives a resident individual deduction on royalty in two cases: an author's royalty on certain books (section 151) and a patentee's royalty on a patent registered on or after 1 April 2003 (section 152). In each case the deduction is the royalty income or Rs 3,00,000, whichever is less. A certificate must be filed with the return, and foreign royalty counts only if it is brought into India in convertible foreign exchange in time.

This guide covers who qualifies, how the Rs 3 lakh cap and the 15% limit on book royalties work, which certificate forms apply (Forms 36, 37 and 38), and what goes wrong in practice. Every figure comes from sections 151 and 152 of the Act (as amended by the Finance Act, 2026) and rules 70, 71 and 72 of the Income-tax Rules, 2026. Last reviewed against that text on 10 November 2026. This is information, not tax advice.

Who can claim the royalty deduction for authors and patentees?

	Author (section 151)	Patentee (section 152)
Who	Individual, resident in India, an author (includes a joint author)	Individual, resident in India, a patentee (includes joint patentees recorded as true and first inventors)
Income covered	Lump sum for assigning or granting copyright interests in a book, or royalty or copyright fees in respect of the book, derived in the exercise of the profession	Royalty on a patent registered on or after 1 April 2003 under the Patents Act, 1970
Deduction	Income, or Rs 3,00,000, whichever is less	Income, or Rs 3,00,000, whichever is less
Extra limit	If not a lump sum for all rights, income above 15% of the value of books sold in the tax year is ignored	For a compulsory licence, royalty is limited to the amount fixed by the Controller
Certificate	Form 36, verified by the payer (rule 70)	Form 37, from the Controller of Patents (rule 71)
Foreign income	Form 38 plus foreign exchange condition	Form 38 plus foreign exchange condition

The deduction is available only to an individual. A company, firm or HUF cannot claim it under these sections.

Which books count under section 151?

The book must be a work of literary, artistic or scientific nature. Section 151(8)(b) says "books" does not include brochures, commentaries, diaries, guides, journals, magazines, newspapers, pamphlets, text-books for schools, tracts and other publications of a similar nature, by whatever name called. The section heading itself says "other than text-books", so a school text-book author is outside it.

A "lump sum" includes an advance payment on account of royalty that is not returnable (section 151(8)(d)).

How much is the deduction? The Rs 3 lakh cap and the 15% limit

Section 151(2) and section 152(2) give the same ceiling: the whole of the royalty income, or Rs 3,00,000, whichever is lower. The cap is per section, so the deduction is worked out separately for each.

For authors there is a second test. Under section 151(3), where the royalty is not a lump sum paid in lieu of all your rights in the book, take the income before deducting related expenses and ignore whatever exceeds 15% of the value of books sold during the tax year. The Rs 3 lakh cap is then applied to what is left.

How is the author royalty deduction calculated? Two worked examples

Both examples are for tax year 2026-27 and assume Form 36 is filed and the author is a resident individual.

Example 1: royalty above the 15% limit

Meena writes a popular science book. Her publisher pays royalty each year, not a lump sum for all rights. In 2026-27 she receives Rs 2,40,000, and books worth Rs 10,00,000 were sold.

Step	Working	Amount (Rs)
1. Royalty received	Given	2,40,000
2. 15% of value of books sold	10,00,000 x 15%	1,50,000
3. Income counted (section 151(3))	Lower of 2,40,000 and 1,50,000	1,50,000
4. Cap (section 151(2))	Lower of 1,50,000 and 3,00,000	1,50,000
Deduction		1,50,000

The remaining Rs 90,000 of royalty stays in her gross total income and is taxed in the usual way.

Example 2: royalty above the Rs 3 lakh cap

Arjun is a joint author of a novel. His share of royalty for 2026-27 is Rs 5,00,000, on sales of Rs 40,00,000.

Step	Working	Amount (Rs)
1. Royalty received	Given	5,00,000
2. 15% of value of books sold	40,00,000 x 15%	6,00,000
3. Income counted	Lower of 5,00,000 and 6,00,000	5,00,000
4. Cap	Lower of 5,00,000 and 3,00,000	3,00,000
Deduction		3,00,000

If Arjun had instead sold all his rights for a lump sum, step 2 would not apply and only the Rs 3 lakh cap would matter.

How does the patent royalty deduction work?

Section 152 applies to a resident individual who is a patentee and receives royalty on a patent registered on or after 1 April 2003. Royalty here means consideration for transferring rights in the patent (including a licence), for information about working or using it, for using it, or for related services (section 152(8)(g)).

Two exclusions matter. Consideration that is chargeable under the head "Capital gains" is not royalty for this section, and neither is the price of selling a product made using the patented process or patented article for commercial use.

Example 3: patent licensed to a manufacturer

Ravi is the registered patentee of a packaging process patented in 2019. A manufacturer pays him Rs 4,20,000 in 2026-27 for a licence. The deduction is the lower of Rs 4,20,000 and Rs 3,00,000, which is Rs 3,00,000. If the royalty were Rs 2,10,000, the deduction would be Rs 2,10,000.

If the patent was under a compulsory licence, the royalty counted cannot exceed the amount fixed in the licence terms settled by the Controller under the Patents Act (section 152(3)). Suppose the Controller set Rs 2,50,000 and the licensee paid Rs 3,50,000: only Rs 2,50,000 counts, so the deduction is Rs 2,50,000.

What if the royalty is earned outside India?

Sections 151(4) and 152(4) count foreign income only to the extent it is brought into India in convertible foreign exchange within six months from the end of the tax year in which it was earned, or within a longer period the competent authority allows. The competent authority is the Reserve Bank of India or another authority regulating foreign exchange (section 151(8)(c)).

Example 4: foreign royalty, partly remitted

Meena's book is also published abroad. She earns Rs 4,00,000 of royalty from there in tax year 2026-27 (ending 31 March 2027). By 30 September 2027 she has brought Rs 2,50,000 into India in convertible foreign exchange.

Step	Working	Amount (Rs)
1. Foreign royalty earned	Given	4,00,000
2. Brought in by 30 Sep 2027	Six months after 31 Mar 2027	2,50,000
3. Counted for the deduction	Lower of the two	2,50,000
Deduction (before the 15% test and cap)	2,50,000 is below Rs 3,00,000	2,50,000

She also needs a Form 38 certificate for the foreign income, along with the return. If the remaining Rs 1,50,000 is brought in after the six months and no extension was allowed, it is not counted.

Which certificates and forms are needed?

Claim	Form	From whom	Rule
Author royalty (section 151(5))	Form 36	Assessee furnishes it; the person paying the royalty verifies it	Rule 70
Patent royalty (section 152(5))	Form 37	Controller of Patents	Rule 71
Foreign royalty, author or patentee (sections 151(6), 152(6))	Form 38	Reserve Bank of India or another authorised foreign exchange authority	Rule 72

Each certificate must be furnished along with the return of income. Without it, the deduction is not allowed.

Can the same royalty be claimed twice?

No. Sections 151(7) and 152(7) say that once a deduction for a tax year has been claimed and allowed on a royalty income, no deduction on that income is allowed under any other provision of the Act in any tax year.

Example 5: a real-life walk-through for a CA

Sunita, a retired professor, is a client. She earns Rs 1,80,000 as royalty on a history book and Rs 2,00,000 on a patent she holds. Each section has its own Rs 3 lakh cap, and each income is below it, so the deductions are Rs 1,80,000 (if within 15% of sales value) and Rs 2,00,000. Her checklist: Form 36 verified by the publisher, Form 37 from the Controller, and the sales figures to prove the 15% test. If the patent royalty is a mix of royalty and sale proceeds of a product, only the royalty part qualifies.

Common mistakes

• Claiming for a school text-book, guide or journal. Section 151(8)(b) excludes them.
• Forgetting the 15% limit. It applies whenever the royalty is not a lump sum for all rights, before the Rs 3 lakh cap.
• Counting foreign royalty not yet brought in. Only the amount received in convertible foreign exchange within six months of the tax year end counts.
• Filing without the certificate. Forms 36, 37 and 38 must go in with the return.
• Claiming for a patent registered before 1 April 2003. Section 152(1)(c) does not cover it.
• Claiming under a company or HUF. Only an individual can claim.

Quick reference

Point	Section 151 (authors)	Section 152 (patents)
Maximum deduction	Rs 3,00,000	Rs 3,00,000
Foreign money in India within	6 months from end of tax year	6 months from end of tax year
Main certificate	Form 36	Form 37
Foreign income certificate	Form 38	Form 38
Double deduction	Barred (151(7))	Barred (152(7))

Where this is in the Act

• Section 151: royalty income of authors of certain books other than text-books; sub-sections (2) cap, (3) 15% limit, (4) foreign exchange, (5) and (6) certificates, (7) no double deduction, (8) definitions
• Section 152: royalty on patents; same structure, with (3) compulsory licence
• Rule 70: Form 36 for section 151(5)
• Rule 71: Form 37 from the Controller for section 152(5)
• Rule 72: Form 38 for sections 151(6) and 152(6)

Royalty paid to non-residents is a different topic, covered in tax on dividends, royalty and fees for technical services for foreign income. For tax deducted by a payer, see TDS on rent under the Income-tax Act, 2025 for how the TDS framework works.

For a CA firm, the hard part is tracking which clients have royalty income, which certificates are still missing and when each return is due. Finexo's practice management software keeps document checklists and deadlines across your client book. It does not issue the certificates or file the return for you.