15 December 2013
As you have posted your query in the accounts section in CCI, so I am taking the presumption that you are more likely to know in accounts point of view.
Meaning:- 'Royalty' is a payment to an owner for the use of property, especially patents, copyrighted works, franchises or natural resources. A royalty payment is made to the legal owner of a property, patent, copyrighted work or franchise by those who wish to make use of it for the purposes of generating revenue or other such desirable activities. In most cases, royalties are designed to compensate the owner for the asset's use, and are legally binding.
Accounting Treatment :- As per accounting standard-9, it should be recognized as revenue in books of a/c as per the payment due in agreement, and there is certainty of receiving such payment.
Taxation Treatment:- You may refer Nikhil's link..
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