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The Income Tax Department has issued detailed Frequently Asked Questions (FAQs) on Form 65, providing clarity on the concessional tax regime available for royalty income earned from patents developed and registered in India. Form 65 has been introduced under Section 194(1) (Table: Sl. No. 2) of the
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FAQ :
Form 65 is an application form introduced under Section 194(1) of the Income-Tax Act, 2025, that allows eligible resident taxpayers to opt for a concessional tax rate of 10% on royalty income derived from patents developed and registered in India.
The primary benefit is a flat concessional tax rate of 10% (plus surcharge and cess) on gross royalty income from qualifying patents. It also allows taxpayers to avail benefits under the "Patent Box Regime", promoting indigenous research and development.
Any resident taxpayer, including individuals, firms, or companies, earning royalty income from patents developed and registered in India can file Form 65. Non-residents are not eligible.
The patent must be registered under the Indian Patents Act, 1970, at least 75% of the total expenditure for the invention must have been incurred in India, and the claimant must be the 'true and first inventor' registered as the patentee.
Form 65 must be filed on or before the due date for furnishing the return of income for the relevant tax year, as specified under Section 263(1) of the Income Tax Act, 2025.
Once a taxpayer opts for the concessional regime via Form 65, they are generally required to continue under it for the next five tax years. Opting out during this period makes them ineligible to re-enter the regime for the following five years.
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