15% of book sales exempted

QI am a senior citizen aged 73 years. I am getting royalty every year from a publisher after the deduction of income tax at the rate of ten per cent. I am provided with a TDS certificate of l6A. Kindly advise whether I can claim deduction under Section 80QQB for the royalty received each year from the taxable income while submitting the TDS from the publisher. RAJESH Delhi

A) As per Section 80QQB of the Income-Tax Act, where the assessee — being an individual resident in India — receives any income by way of any lumpsum consideration for the assignment or grant of any of his interests in the copyright of any book being a work of literary, artistic or scientific nature, or of royalty or copyright fees in respect of such book, the deduction under this section will be equal to 100 per cent of such income or `3 lakh, whichever is less.

However, where the royalty income or copyright fee, is not a lump sum consideration in lieu of all rights of the author in the book, for calculating the deduction under Section 80QQB, the amount of gross eligible income (i.e., before allowing expenses pertaining to such income) should not exceed 15 per cent of the value of the books sold during the previous year.

In other words, where a lump sum amount is not receivable by the author, then the deduction will be limited to 15 per cent of the value of the books sold during the accounting year.

Where a deduction for any previous year is claimed and allowed in respect of eligible income u/s 80QQB, no deduction in respect of such income will be allowed under any other provisions of the Act in any assessment year. The assessee is also required to furnish a certificate in the prescribed Form No. 10CCD duly verified by the person responsible for paying such income along with the return of income.

QDeduction under Section 80QQB (before allowing expenses pertaining to such income) should not exceed 15 per cent of the value of the books sold during the previous year.

I would like you to guide me as to how payment received on maturity on National Savings Certificate (series VIII) during this financial year is to be treated. Does it need to be included as a part of income? If yes, do I need to include only the principal amount or the total amount inclusive of interest? I am also told that fixed deposits in banks or post offices can be claimed as deduction under Section 80C within the overall 1.5 lakh limit. Is it true? PHALGUN Hyderabad

A) The interest accrued on NSC has to be shown as income every year and deduction under Section 80C can be claimed to the same extent as the amount is re-invested every year. However, since you have not admitted the interest income in earlier years, the total interest amount may be included in the financial year in which the NSC has matured. There will be no liability on the principal amount received back on maturity. Deposits as five-year time deposits (fixed) in banks or post offices with the tax-saver option are also included in the list of admissible deductions under Section 80C.

(The writer is a Hyderabad-based chartered accountant. Please send your queries to info@rathiandmalani.com)