Royalty taxation covers intellectual property, software, know-how, equipment use and connected services, subject to capital gains exclusions.

Royalty includes lump-sum consideration, other than capital gains consideration, for transfers, licences, use rights and information relating to intellectual property, technical or scientific know-how, equipment and copyright works, as well as connected services. The definition includes computer software rights regardless of transfer medium and applies even where the payer lacks possession, control or direct use, or the relevant right, property or information is outside India. Patent-related royalty under the concessional patent-income regime is confined to specified patent rights, information, use and connected services, with exclusions for capital gains and commercial product sales.

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