Explanation
Section 115BBF was introduced by the Finance Act 2016 to create a patent box regime in India and incentivise domestic intellectual property development. Eligible taxpayers are resident individuals who are the original grantee or a company that is an Indian company. The patent must have been developed and registered in India under the Patents Act 1970. The royalty income taxed at 30% must arise from the exploitation of the patent right — licensing fees, usage royalties, etc. The rate of 30% may appear high in isolation, but it is beneficial for high-income taxpayers who would otherwise pay the surcharge-laden marginal rate. No deductions or expenditure claims are permitted against this income — it is a gross flat rate. If the taxpayer has both patent royalty and other income, only the patent royalty portion is taxed at 30%; other income follows normal provisions. The section is available under both old and new tax regimes for companies but individual eligibility should be confirmed. Verify on the income-tax portal before filing.