Can modest revenue/royalty obtained on guide gross sales from any Indian writer be proven underneath different revenue within the ITR 1 type?
— Kapurash
It’s assumed that you’re a resident and strange resident (ROR) of India.
Revenue/royalty from guide gross sales will be categorized as revenue from different sources (IOS) or income and positive factors from enterprise and occupation (PGBP). Whether or not an revenue is to be proven underneath IOS or PGBP is dependent upon varied elements (e.g. quantity, income, frequency, and so on.) and details of every case.
In case you’re primarily engaged within the enterprise/occupation of authoring books for incomes royalty/commercial revenue, and so on., it’s possible you’ll think about reporting it underneath PGBP, else it’s possible you’ll think about reporting the identical underneath IOS.
As per the directions issued for ITR Kinds for FY 2020-21, Type ITR 1 could also be used for tax return submitting (the place the whole revenue doesn’t exceed ₹50 lakh) reporting revenue from wage, one home property, and curiosity revenue/household pension/ dividend taxable underneath the top IOS. Additional, the shape can’t be used to assert any deduction of bills referring to the revenue underneath the top IOS (besides household pension). Subsequently, ITR 1 is probably not the suitable type for disclosing the royalty/commercial revenue underneath the top “revenue from different sources” and it’s possible you’ll use ITR 2 for submitting the tax return. ITR 3 is relevant if revenue is disclosed underneath PGBP.
To corroborate the disclosures in regards to the revenue, if required earlier than the Indian tax authorities, the taxpayer could showcase the settlement entered into with the writer, primarily based on computation/ reconciliation of revenue, settlement/affirmation from the writer on the quantum, and so on., as back-up paperwork.
Deduction could also be claimed in respect of bills (not like capital expenditure) incurred wholly and solely in incomes the revenue chargeable underneath IOS. Thus, it’s possible you’ll deduct the bills wholly and solely incurred in incomes the royalty/commercial revenue, whereas computing the taxable revenue.
Deduction, underneath part 80QQB (topic to threshold restrict of ₹3 lakh) could also be thought of if the desired situations are fulfilled (together with acquiring a certificates in Type 10CCD from the Indian writer).
Parizad Sirwalla is accomplice and head, world mobility companies, tax, KPMG in India.
Supply: Live Mint