Royalty on patents deduction applies only to resident patentees, with strict eligibility, remittance, certification, and cap conditions.

Deduction in respect of royalty on patents is available to a resident individual patentee for royalty from an eligible patent registered under the Patents Act, 1970 and granted on or after 1 April 2003. Royalty includes consideration for transfer or licence of patent rights, use of the patent, and related services, but excludes capital gains and sale consideration for products made using the patented process or article. The deduction is limited to the actual royalty or the prescribed cap, whichever is lower, subject to foreign remittance and certificate requirements.

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