How to file TDS returns for royalty income?

Posted In | Finance | Accounting Software | India Accounting Tax

Understanding the Tax Deducted at Source (TDS) mechanism and how to apply it to your royalty income is critical for anyone earning income from intellectual property. This article will guide you through the steps involved in filing TDS returns for royalty income.

 

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Understanding Royalty Income and TDS

In general, royalty income refers to the payments made to the owner of a copyright, patent, or other similar rights for the use of their property. In India, TDS on royalty income is deducted under section 194J of the Income Tax Act, which deals with fees for professional or technical services.

 

Steps to File TDS Returns for Royalty Income

Here are the steps you need to follow to file TDS returns for your royalty income:
 

Step 1: Obtain Form 26Q

Form 26Q is the statement for tax deducted at source from all payments other than salaries. You can obtain this form from income tax department or download it online from the income tax website.
 

Step 2: Fill in the Details

Once you have the form, you need to fill in the required details. This includes your PAN, the total amount of royalty received, the amount of TDS deducted, and the TDS rate.
 

Step 3: Verification

After filling out the form, you must verify the information provided. This can be done either by the individual themselves, or by a person duly authorized to do so on their behalf.
 

Step 4: Submission

Once the form is completed and verified, it must be submitted to the income tax department. This can be done either online or offline, depending on your preference. You will also need to pay any remaining tax due at this point.
 

Step 5: TDS Certificate

After submitting the form and payment, you will receive a TDS certificate from the income tax department. This certificate is proof that tax has been deducted at source on your royalty income and deposited with the government.

 

Filing TDS returns for royalty income can seem daunting at first, but with a clear understanding of the process and the right tools, it can be a straightforward task. If you are unsure about any part of the process, it may be worth consulting with a tax professional.