Section 152 of the Income-tax Act, 2025 — Deduction for Royalty on Patents (Old 80RRB)

In plain language

What Section 152 means

Section 152 of the Income-tax Act, 2025 gives a special tax deduction to resident individual inventors who earn royalty income from their own patents. It is the direct re-write of the old Section 80RRB of the Income-tax Act, 1961 — the wording is modernised but the benefit is essentially the same. The idea is simple: India wants to reward people who invent things, so a slice of the money they make from licensing or exploiting their patent is made tax-free.

The deduction is the lower of the actual patent royalty income or ₹3,00,000 in a tax year. Anything above ₹3 lakh is taxed normally.

Who can claim it

• Individuals only — companies, LLPs, firms, HUFs and other entities cannot claim it.
• You must be resident in India for the tax year (a resident individual; earlier practice also recognised resident-but-not-ordinarily-resident). Non-residents are excluded.
• You must be a patentee — the true and first inventor, or a joint patentee — whose name is entered in the patents register. If you merely bought the patent from someone else, you are not the inventor and cannot claim.
• The patent must be registered under the Patents Act, 1970 on or after 1 April 2003.

What income qualifies

The benefit covers royalty — that is, consideration (including a lump sum) for:

• transfer of all or any rights in a patent, or granting a licence;
• imparting information about working or using the patent;
• use of the patent; or
• rendering services connected with the above.

Important exclusions: royalty here does not include any consideration that would be taxable as capital gains, nor the price of selling articles manufactured using a patented process/article. Those are taxed under their own heads and get no 152 benefit.

Key conditions and limits

• Cap of ₹3,00,000 per tax year (whole income or ₹3 lakh, whichever is lower).
• Compulsory licence: if a compulsory licence is granted on your patent under the Patents Act, the royalty counted for this deduction cannot exceed the amount the Controller settles in that licence.
• Foreign royalty: royalty earned outside India qualifies only if it is brought into India in convertible foreign exchange within 6 months from the end of the tax year (or a longer period allowed by the RBI/competent authority).
• Certificate required: you must file a prescribed-form certificate (traditionally Form 10CCE, signed by the prescribed authority — the Controller of Patents) with your return. Foreign income needs an additional certificate.
• No double deduction: once income is allowed under Section 152, you cannot claim any other deduction on the same income anywhere else in the Act.

How it interacts with other sections and the tax regimes

Section 152 sits with the other Chapter-VIA-style deductions in the 2025 Act (alongside 80C/80D successors). A crucial practical point carried over from 80RRB: this class of deduction is generally available under the old tax regime and is not allowed under the default new/concessional regime. So an inventor with meaningful patent royalty should compare both regimes before filing.

Practical implications

• Keep the patent certificate, licensing/royalty agreements and Form 10CCE ready — the certificate from the Patent Controller is non-negotiable.
• If you receive foreign royalty, plan the remittance timeline so money lands in India within six months in forex.
• The ₹3 lakh cap is per person, per year, not per patent — multiple patents still share one ceiling.