Royalty from outside India
This query is : Resolved
30 June 2021
If Indian resident is receiving royalty from foreign country e.g. US, then
1. Can he/ she claim benefit of India - US treaty?
2. Do normal tax slab rates apply to the royalty income under income tax act? If not, then what is the tax rate under income tax act and which section of IT act mention this rate?
3.What is the tax rate under treaty and under which article of treaty?
4.Can one claim deduction under 80c in addition to 80RRB & 80 QQB for royalty?
5.Does person have to mention the income from royalty under 'schedule of foreign assets (FA)' under the head of " DETAILS OF ANY OTHER INCOME DERIVED FROM SOURCE OUTSIDE INDIA".
6. If Payout is in dollars, but money is getting deposited in Indian Bank in indian currency through PayPal. So, which amount should be considered in computing tax liability, payout amount or that deposited in bank?
1. Can he/ she claim benefit of India - US treaty?
2. Do normal tax slab rates apply to the royalty income under income tax act? If not, then what is the tax rate under income tax act and which section of IT act mention this rate?
3.What is the tax rate under treaty and under which article of treaty?
4.Can one claim deduction under 80c in addition to 80RRB & 80 QQB for royalty?
5.Does person have to mention the income from royalty under 'schedule of foreign assets (FA)' under the head of " DETAILS OF ANY OTHER INCOME DERIVED FROM SOURCE OUTSIDE INDIA".
6. If Payout is in dollars, but money is getting deposited in Indian Bank in indian currency through PayPal. So, which amount should be considered in computing tax liability, payout amount or that deposited in bank?
30 June 2021
It is advisable to take professional opinion for more accurate response.
Assuming that the said royalty income is already taxed in US, please find the below response:
1. Yes. You can claim tax credit of amount of tax deducted or paid in USA
2. You have an option either to be taxed as per the Double Taxation Avoidance Agreement or as per the normal provisions of Income Tax Act 1961, whichever is more favorable to you
3. If your royalty transaction classifiable under point (b) of below mentioned definition then applicable tax rate is 10% else it's 15%
In paragraph 3 of Article 12 of DTAA with USA
Royalties means :
(a) payments of any kind received as a consideration for the use of, or the right to use, any copyright of a literary, artistic, or scientific work, including cinematograph films or work on film, tape or other means of reproduction for use in connection with radio or television broadcasting, any patent, trade mark, design or model, plan, secret formula or process, or for information concerning industrial, commercial or scientific experience, including gains derived from the alienation of any such right or property which are contingent on the productivity, use, or disposition thereof ; and
(b) payments of any kind received as consideration for the use of, or the right to use, any industrial, commercial, or scientific equipment, other than payments derived by an enterprise described in paragraph 1 of Article 8 (Shipping and Air Transport) from activities described in paragraph 2(c) or 3 of Article 8.
4. No. Refer Section 80RRB(4) and 80QQB(5) on Income tax Act 1961
5. Details of "any other income derived from outside India" needs to be filled
6. Convert income in foreign currency into INR using SBI's Telegraphic Transfer Buying Rate (TTBR). For conversion of foreign currency income earned in a month, TTBR rate of last date of the previous month is used. For example TTBR rate as on 31.5.2021 to be used for conversion of income earned in June 2021
Assuming that the said royalty income is already taxed in US, please find the below response:
1. Yes. You can claim tax credit of amount of tax deducted or paid in USA
2. You have an option either to be taxed as per the Double Taxation Avoidance Agreement or as per the normal provisions of Income Tax Act 1961, whichever is more favorable to you
3. If your royalty transaction classifiable under point (b) of below mentioned definition then applicable tax rate is 10% else it's 15%
In paragraph 3 of Article 12 of DTAA with USA
Royalties means :
(a) payments of any kind received as a consideration for the use of, or the right to use, any copyright of a literary, artistic, or scientific work, including cinematograph films or work on film, tape or other means of reproduction for use in connection with radio or television broadcasting, any patent, trade mark, design or model, plan, secret formula or process, or for information concerning industrial, commercial or scientific experience, including gains derived from the alienation of any such right or property which are contingent on the productivity, use, or disposition thereof ; and
(b) payments of any kind received as consideration for the use of, or the right to use, any industrial, commercial, or scientific equipment, other than payments derived by an enterprise described in paragraph 1 of Article 8 (Shipping and Air Transport) from activities described in paragraph 2(c) or 3 of Article 8.
4. No. Refer Section 80RRB(4) and 80QQB(5) on Income tax Act 1961
5. Details of "any other income derived from outside India" needs to be filled
6. Convert income in foreign currency into INR using SBI's Telegraphic Transfer Buying Rate (TTBR). For conversion of foreign currency income earned in a month, TTBR rate of last date of the previous month is used. For example TTBR rate as on 31.5.2021 to be used for conversion of income earned in June 2021
30 June 2021
Thank you so much for answering my queries
What if no tax is deducted in US
Then still one can claim benefit under treaty , or normal tax slab rates under Income tax act will apply.
What is tax rate under income tax for royalty if one wants to claim benefit under treaty (which section of IT act deals with it)
What if no tax is deducted in US
Then still one can claim benefit under treaty , or normal tax slab rates under Income tax act will apply.
What is tax rate under income tax for royalty if one wants to claim benefit under treaty (which section of IT act deals with it)
01 July 2021
In such a case normal tax slab rates under Income tax act will apply.
No special rate for royalty.
No special rate for royalty.
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