Royalty payment receipts
This query is : Resolved
19 July 2023
Whether royalty received by me as a landowner for extarction of minerals is income from business or profession?
19 July 2023
It can be assessed as income from Business u/h. PGBP.
19 July 2023
TDS has been deducted u/s 194 JB as professional fees @ 10% of gross receipts by the lessee. So, would it be regarded as professional receipts and then provisions of section 44ADA would become applicable.
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19 July 2023
Services covered for TDS deduction under Section 194J are professional services, technical services, royalty, remuneration paid to directors etc.
Royalty payments can refer to license fees for using another person's intellectual property or a brand name.
Here the service provided is not royalty fees for any intellectual property, but right to use the land for extraction, which is not a professional service.
Till an option is not available for all the different kind of royalties, TDS is to be deducted on higher side. But that inversely doesn't mean all the royalties must be professional services.
Royalty payments can refer to license fees for using another person's intellectual property or a brand name.
Here the service provided is not royalty fees for any intellectual property, but right to use the land for extraction, which is not a professional service.
Till an option is not available for all the different kind of royalties, TDS is to be deducted on higher side. But that inversely doesn't mean all the royalties must be professional services.
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19 July 2023
Broadly speaking Sec. 44ADA is applicable only over professional individuals carrying on specified professions as mentioned in sec. 44AA(1) IT act.
Even Such professional activities carried on by Trust, BOI, HUF, companies (e.g Hospitals) are being tax deducted u/s. 194J IT act, but while filing ITR of HUF it is not allowed to adopt sec. 44ADA. Means for all such entities they are business activities.
So, any other activity not performed by professional individuals is always a BUSINESS.
Even Such professional activities carried on by Trust, BOI, HUF, companies (e.g Hospitals) are being tax deducted u/s. 194J IT act, but while filing ITR of HUF it is not allowed to adopt sec. 44ADA. Means for all such entities they are business activities.
So, any other activity not performed by professional individuals is always a BUSINESS.
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